The Determinants and Implications of Matching Maturities

Sang-Gyung Jun () and Frank C. Jen ()
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Sang-Gyung Jun: School of Business, Hanyang University, 17 Haengdang-dong Seongdong-gu, Seoul 133-791, Korea
Frank C. Jen: School of Management, State University of New York, Buffalo, NY 14260, USA

Review of Pacific Basin Financial Markets and Policies (RPBFMP), 2005, vol. 08, issue 02, 309-337

Abstract: Though maturity matching is a common practice in real finance, no academic study has been conducted yet on cross-sectional variations in the degree of maturity matching. This study derives hypotheses on the maturity matching and empirically tests them. We show that firms with a higher degree of maturity matching are more likely to stabilize equity values: they have lower stock return volatilities. We also show evidence supporting the existence of an optimal level of maturity matching. Though financially strong firms generally employ a higher degree of maturity matching, the relationship between financial strength and maturity matching is not monotonic.

Keywords: Maturity matching; immunization; agency costs; return volatility; financial strength (search for similar items in EconPapers)
JEL-codes: G1 G2 G3 (search for similar items in EconPapers)
Date: 2005
References: View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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DOI: 10.1142/S0219091505000397

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