The Determinants of Corporate Debt Maturity Structure

47 Pages Posted: 19 Apr 2003

Date Written: December 12, 2002


This study examines the determinants of corporate debt maturity structure decisions of French, German and UK firms using panel data. These countries are characterised by different financial systems and traditions that have implications on how firms decide their debt maturity structure. We apply several alternative estimation methods and show that in debt structure modelling endogeneity problem should be controlled for. We do so by using Generalised Method of Moments (GMM) estimation method. The GMM results suggest that firms in all three countries adjust their debt ratios to attain their target maturity structure. However, the speed at which firms adjust their maturity structure towards their target levels differs from one country to another. A direct association of debt maturity with leverage in all countries confirms the predictions of the liquidity risk argument. However, corporate tax rate, growth opportunities, liquidity, firm quality, earnings volatility, asset maturity and firm size have different degree and direction of effect on debt maturity across the sample countries. Apart from these firm-specific factors, we also find that the impact of market-related factors (term structure of interest rates, equity premium, share price performance, and interest rate volatility) on debt maturity is country dependent. Hence, the debt maturity structure of a firm is determined by both firm-specific factors and country-specific effects.

Keywords: Dynamic Debt Maturity Structure, Panel Data, System-GMM

JEL Classification: G20, G32

Suggested Citation

Antoniou, Antonios and Guney, Yilmaz and Paudyal, Krishna N., The Determinants of Corporate Debt Maturity Structure (December 12, 2002). Available at SSRN: or

Antonios Antoniou

Wealth Associates ( email )

Alpine House,
Honeypot Lane
London, NW9 9RX
United Kingdom

Yilmaz Guney

Coventry University ( email )

Coventry, CV1 5FB
United Kingdom

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