A Study On The Determinants Of Debt Maturity Structure Of Listed Companies In China

Since the1960s, there have been numerous studies focusing on the theoretical and empirical aspects of corporate capital structure. However, debt maturity structure has not yet received as much attention as the capital structure. Corporate debt maturity structure is very essential to a corporation. Appropriate debt maturity structure of firms could help the corporations to avoid possible liquidity risk, reduce agency costs, signal the quality of their earnings and balance between efficiency and cost. There is a theoretic system consisting of Contracting Theory, Signaling Theory, Tax Theory and Matching Principle. Given that Chinese corporate debt maturity is much shorter than other countries, these theories are not enough to explain the difference. On the basis of the existing results, this thesis test the determinants of Chinese listed company’s debt maturity, add more Chinese specific variables and try to explain from a time-varying perspective.This thesis investigates the determinants of corporate debt maturity structure of Chinese listed companies from2000to2010. Firstly, we empirically test the Contracting Theory, Signaling Theory, Tax Theory and Matching Principle using pooled OLS, random-effect and fixed-effect models. We find that the size of the firm, growth opportunities and asset maturity have significant effects in extending the maturity of debt employed by Chinese companies. Also, we document a significant and robust inverse relation between credit risk and corporate debt maturity. However, proxies for a firm’s quality and effective tax rate report insignificant results. The Chinese listed companies’ debt maturity structure strongly supports the Contracting Theory, Matching Principle and partially supports the Signaling Theory. Furthermore, we innovatively add ownership and industry variables into the models. The results show that companies that are state-owned or in more concentrated industries tend to hold longer maturity debt and the mixed effect of ownership and industry extend the difference. In the end, for the first time, we also analyze the debt maturity structure from a time-varying perspective, by adding time trend to show the difference of corporate debt maturity structure before and after the2008financial crisis.