The determinants of debt maturity in Australian firms

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...

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Bibliographic Details
Published inAccounting and finance (Parkville) Vol. 52; no. 2; pp. 313 - 341
Main Authors Alcock, Jamie, Finn, Frank, Tan, Kelvin Jui Keng
Format Journal Article
LanguageEnglish
Published Oxford, UK Blackwell Publishing Ltd 01.06.2012
Accounting and Finance Association of Australia and New Zealand
SeriesAccounting and Finance
Subjects
Australian Securities Exchange
Capital
Capital markets
Capital structure
Corporate debt
Debt
Debt maturity
Econometrics
G01
G32
Hypotheses
Leverage
Maturity
Studies
Australia
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Summary: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.
Bibliography:ArticleID:ACFI397
istex:88A641E771F33DB6A47B8656385C7887FD686D73
ark:/67375/WNG-96KQHSSM-3
Accounting and Finance, v.52, no.2, June 2012: (313)-341
The authors would like to thank Necmi Avkiran, Trent Carmichael, Louis Ederington, Robert Faff, John Clapp, Frederick Harris, Stephen Gray, Laurel Yanliang Yu, two anonymous referees, and conference and seminar participants at the 2010 Midwest Finance Conference, 2009 Australasian Finance and Banking Conference, and 2008 Financial Integrity Research Network (FIRN) Doctoral Tutorial for their helpful comments and suggestions. We also thank the Australian Research Council and The University of Queensland (UQ) for their financial support of this research (Discovery Grant DP0663048 and UQ New Staff Research Start‐Up Grant 2010001862).
ISSN:0810-5391
1467-629X
DOI:10.1111/j.1467-629X.2010.00397.x