Debt and Asset Maturity - Do Companies Match, and If So, Why?

47 Pages Posted: 8 Mar 2018

See all articles by Sebastian J. Reinartz

Sebastian J. Reinartz

Technische Universität München (TUM)

Robert Heigermoser

Technische Universität München (TUM), Students; Technische Universität München (TUM) - Department of Financial Management and Capital Markets

Christoph Kaserer

Technische Universität München (TUM)

Date Written: March 2, 2018

Abstract

This study re-examines the impact of asset maturity on debt maturity choices. The pertinent literature suffers from the fact that asset maturity typically is hard to observe. In this paper we exploit the fact that for energy utilities asset maturity can directly be measured. Using a sample of 193 energy utility companies in the period 2002 to 2009 we first show that asset maturity proxies used in the literature do a fairly good job. Second, we present evidence that asset maturity is not only a statistically, but also economically significant driver for debt maturity. Third, we find that firms do not determine the maturity of newly issued debt instruments with respect to overall asset maturity, but in a way that their maturity gap is reduced. We estimate that an increase in maturity gap by one year causes the maturity of the new debt instrument to be almost four years longer than average debt maturity.

Keywords: Debt Maturity, Capital Structure, Debt Issuance, Maturity Matching

JEL Classification: G30, G32

Suggested Citation

Reinartz, Sebastian Johannes and Heigermoser, Robert and Heigermoser, Robert and Kaserer, Christoph, Debt and Asset Maturity - Do Companies Match, and If So, Why? (March 2, 2018). Available at SSRN: https://ssrn.com/abstract=3133101 or http://dx.doi.org/10.2139/ssrn.3133101

Sebastian Johannes Reinartz

Technische Universität München (TUM) ( email )

Arcisstrasse 21
Munich, DE 80333
Germany

Robert Heigermoser

Technische Universität München (TUM) - Department of Financial Management and Capital Markets ( email )

Munich, 80333
Germany

Technische Universität München (TUM), Students ( email )

Munich, 80333
Germany

Christoph Kaserer (Contact Author)

Technische Universität München (TUM) ( email )

Arcisstr. 21
Munich, D-80290
Germany
+49 89 289 25489 (Phone)
+49 89 289 25488 (Fax)

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