The Determinants of Debt Maturity in Australian Firms
Accounting & Finance, Forthcoming
31 Pages Posted: 19 Dec 2010
Date Written: December 19, 2010
We examine the determinants of debt maturity in the Australian capital market with the Top 400 firms listed on the Australian Securities Exchange for the period 1989 to 2006. We find that Australian firms not only exhibit a positive leverage-maturity relationship but also use short-term debt to signal their high quality to the market. Our results are robust to different estimation methods that control for endogeneity and error-dependence. We also find that ignoring the interaction between leverage and maturity can lead to erroneous conclusions about the support for the matching principle, the agency costs hypothesis and the transaction costs hypothesis.
Keywords: Debt Maturity, Capital Structure
JEL Classification: G32, G01
Suggested Citation: Suggested Citation