The Debt-Maturity Structure of Small Firms in a Creditor-Oriented Environment

Topics:
Commercial Lending,
Debt
Tags:
Structure,
Vlerick Leuven Gent Management School
Source:
Vlerick Leuven Gent Management School

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Overview: Once a firm decides to issue debt, the characteristics of this debt instrument should be considered. One of the critical decisions involves debt maturity. Using a sample of 1091 Belgian small firms from 1996 until 2000, this paper analyses the determinants of the corporate debt-maturity structure of small firms in a creditor-oriented system. Consistent with previous empirical evidence on large firms, the present results strongly support the maturity-matching principle. The hypothesis that firms with many growth opportunities will borrow on the short term as a response to the under-investment problem, is not supported. There is a clear relation between the credit worthiness of a firm and the debt-maturity structure.

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Format: PDF | Size: 77KB | Date: Sep 2003 | Pages: 32

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