A research of debt maturity structure of manufacring companies listed on hose

Abstract

This study investigates the relationship between several macro economic as well as firm specific factors that affect the debt maturity structure of a company by applying Least Square Dummy Variable regression model . The study sample consists of 98 manufacturing companies listed on HOSE and the examined period is from the first quarter of 2008 to the fourth quarter of 2012. Liquidity risk and signaling, agency costs, equity market conditions, tax minimization and gap filling are adapted in our model in order to make hypotheses . Several examinations are made to see whether time or industries have any influence on company choice of debt maturity structure or if the decision is made independently. As for the liquidity risk theory, the main concern lies in postponing the refinancing risk, which is controlled by taking on debt of longer maturities. The gap filling hypothesis also has an impact on companies’ choice of debt maturity structure as we observe a positive relationship between the government’s and companies’ debt maturity structure. Finally, we find that companies’ choice of debt maturity structure is made on an individual basis, with no importance given to industry trends or structural breaks.