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Ownership and Control Structure as Determinants of Corporate Debt Maturity: a panel study of an emerging market
Author(s) -
Arslan Özgür,
Karan Mehmet Baha
Publication year - 2006
Publication title -
corporate governance: an international review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.866
H-Index - 85
eISSN - 1467-8683
pISSN - 0964-8410
DOI - 10.1111/j.1467-8683.2006.00509.x
Subject(s) - maturity (psychological) , leverage (statistics) , capital structure , debt ratio , internal debt , business , debt , turkish , monetary economics , corporate governance , shareholder , debt levels and flows , panel data , financial system , accounting , economics , finance , econometrics , machine learning , computer science , psychology , developmental psychology , linguistics , philosophy
This study highlights the corporate governance potential of debt maturity structure for Turkish firms through investigating its association with ownership and control structure. We model leverage and debt maturity as jointly endogenous under simultaneous equations framework. Firstly, we find that both concentrated ownership structure and presence of a large shareholder is directly but moderately related to corporate debt maturity. We also document that it is important for Turkish firms to match maturity of their assets with maturity of their liabilities. Our findings lend considerable support to the prediction that as firms get financially strong or have more growth opportunities they shorten their corporate debt maturity structure. Moreover, despite having a controlling large shareholder or a concentrated ownership structure, firms with growth opportunities still prefer shorter maturities in order to solve the underinvestment problems. Finally, firm size is positively associated with long‐term debt and our empirical analysis provides no evidence that taxes affect debt maturity structure.