Ownership and Control Structure as Determinants of Corporate Debt Maturity: a panel study of an emerging market

Özgür Arslan‐Ayaydin · Mehmet Baha Karan

65 citations0/0 files storedCorporate Governance An International Review

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Corporate Finance and Governance Financial Analysis and Corporate Governance Fiscal Policies and Political Economy

Abstract

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.

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References

1976Theory of the firm: Managerial behavior, agency costs and ownership structure 1998Law and Finance 1997A Survey of Corporate Governance 1968FINANCIAL RATIOS, DISCRIMINANT ANALYSIS AND THE PREDICTION OF CORPORATE BANKRUPTCY 1977Determinants of corporate borrowing 1980Agency Problems and the Theory of the Firm 1986Large Shareholders and Corporate Control 2000Investor protection and corporate governance

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