Debt Maturity Structure of Chinese Companies

Pacific-Basin Finance Journal, Vol. 16, pp. 268–297, 2008

40 Pages Posted: 7 Dec 2009

See all articles by Kailan Cai

Kailan Cai

University of Bath

Richard J. Fairchild

University of Bath - School of Management

Yilmaz Guney

University of Hull

Date Written: December 2, 2009

Abstract

Numerous studies have focused on the theoretical and empirical aspects of corporate capital structure since the 1960s. As a new branch of capital structure, however, debt maturity structure has not yet received as much attention as the debt-equity choice. We use the existing theories of corporate debt maturity to investigate the potential determinants of debt maturity of the Chinese listed firms. In addition to the traditional estimation methods, the system-GMM technique is used to explicitly control for the endogeneity problem. We find that the size of the firm, asset maturity and liquidity have significant effects in extending the maturity of debt employed by Chinese companies. The amount of collateralized assets and growth opportunities also tend to be important. However, proxies for a firm’s quality and effective tax rate apparently report mixed or unexpected results. Debt market and equity market conditions are also examined in relation to corporate loan maturity. The system-GMM results show that market factors seem to influence debt maturity decisions. Finally, corporate equity ownership structure has also been found to have some impact on debt maturity mix.

Keywords: Chinese firms, corporate debt maturity, system-GMM, market conditions, ownership structure

JEL Classification: G3, G32

Suggested Citation

Cai, Kailan and Fairchild, Richard J. and Guney, Yilmaz, Debt Maturity Structure of Chinese Companies (December 2, 2009). Pacific-Basin Finance Journal, Vol. 16, pp. 268–297, 2008. Available at SSRN: https://ssrn.com/abstract=1517123

Kailan Cai

University of Bath ( email )

Claverton Down
Bath, BA2 7AY
United Kingdom

Richard J. Fairchild

University of Bath - School of Management ( email )

Claverton Down
Bath, BA2 7AY
United Kingdom
01225 323456 (Phone)
01225 323902 (Fax)

Yilmaz Guney (Contact Author)

University of Hull ( email )

Hull, HU6 7RX
United Kingdom

HOME PAGE: http://https://www.hull.ac.uk/faculties/fblp/hubs.aspx

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