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The determinants of debt maturity in Australian firms
Author(s) -
Alcock Jamie,
Finn Frank,
Tan Kelvin Jui Keng
Publication year - 2012
Publication title -
accounting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.645
H-Index - 49
eISSN - 1467-629X
pISSN - 0810-5391
DOI - 10.1111/j.1467-629x.2010.00397.x
Subject(s) - leverage (statistics) , endogeneity , agency cost , transaction cost , maturity (psychological) , debt , monetary economics , business , capital structure , economics , propensity score matching , econometrics , financial economics , finance , statistics , psychology , corporate governance , developmental psychology , mathematics , shareholder
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 1989–2006. 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.