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Corporate Characteristics、Government Intervention and Corporate Debt Maturity Structure

Author: YeZuo
Tutor: TangGuoQiong
School: Southwestern University of Finance and Economics
Course: Financial Management
Keywords: Debt Maturity Structure Government Intervention Determinants
CLC: F275
Type: Master's thesis
Year: 2010
Downloads: 200
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Abstract

In 1958, American economist Modigliani and financial economist Miller published their immortal paper "the Cost of Capital, Corporation Finance, and the Theory of Investment" in American Economic Review. Since then the research on corporate finance enters a new area. From that time, the theoretical and empirical research on capital structure and other financial decisions have become one of the core areas of modern corporate finance research. However most of the literature focuses on the choice between equity and debt. In other word, most researchers conduct their research on capital structure based on the assumption that different kinds of debt are homogeneous as if there was only one type of debt a company could issue. However in reality companies can issue different kinds of debts and those debts differ in several important dimensions. Recently, some foreign financial economists have carried out extensive research in this area. So far mainly formed four theoretical hypothesis:duration matching hypothesis, agency cost theory hypothesis, tax theory hypothesis, signaling theory hypothesis. The research on the debt maturity structure in China is far behind that in other countries. There are very few studies on the debt maturity structure until recent. However the research on the debt maturity is very important for the reasons as follows. First, the debt financing is a significant component of total financing of listed companies in China. Second, the debt maturity structure has substantial influence on the value of a company.Debt financing is an important financial decision-making behaviour of business, debt maturity is an important part of debt contracts, which regulate the creditor and the debtor’s rights and obligations. The longer the debt maturity, the higher the uncertainty about the future, the greater the risk of the creditors in the provision of loans will pay more attention to external compliance mechanism. Most scholars’research of debt maturity structure mainly on corporate identity, but rather from the institutional environment. This thesis is divided into five chapters and mainly studies the determinants of debt maturity structure of listed companies, the following is main content included in each chapter.Chapter 1 is introduction. In this chapter, I introduce the significance, the objective, the methodology and the originality of the research.Chapter 2 is literature review. In this chapter, providing a summary of the literature on the debt maturity structure, which was mainly conducted in other countries. Since the research on the debt maturity structure in China is still in its initial stage and the research conducted in other countries focuses on the determinants of debt maturity structure. On this basis, reviewed the relationship between government intervention and the debt maturity structure.Chapter 3 is, the empirical study on the determinants of debt maturity structure of listed company. First identify the potential explanatory variables according to the research conducted in other countries and the actual characteristics of the listed companies. Second provide an explanation for the test results.Chapter 4 is on the basis of listed company’s empirical data, investigate the effect of government influence on corporate debt maturity. We find that government influence degree is highly correlated with corporate debt maturity structure, the more degree of government influence, the higher of corporate long-term loans proportion.Chapter 5 is conclusion. This chapter summarizes the research results in this thesis and offer some policy suggestions and possible directions of future research.The main contributions of this paper are as follows:This paper analyses factors that affect the debt maturity structure,based on the background to arrive at a system suited to China’s debt maturity structure theory. And on the basis to control corporate identity factors, research on the relationship between government intervention and debt maturity structure. In this study:(1)not only take into account internal factors, but also take into account China’s specific institutional context. (2) It provide a more deeper evidence for the impact of government intervention to enterprise’s financial decision-making.The limitation of this paper are as follows:(1)this paper use a single equation to research the debt maturity structure, does not take into account the maturity structure of debt and financial leverage endogenous problem. (2) the measurement of debt maturity structure is limited by the availability of data, did not use the "incremental measure".

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