Empirical Investigation of Debt-Maturity Structure: Evidence from Pakistan

Attaullah Shah () and Shahid Ali Khan
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Shahid Ali Khan: Institute of Management Sciences, Peshawar

The Pakistan Development Review, 2009, vol. 48, issue 4, 565–578

Abstract: We examine the empirical determinants of debt-maturity structure of 266 firms listed on the KSE over the period 2000 to 2004 using several variants of dynamic panel data models. We find mixed support for the agency cost hypothesis as our results show that debtmaturity increases with the size of the firm; however, growth options do not have any significant influence on debt-maturity structure. Our results lend unambiguous support to the maturity-matching hypothesis as debt-maturity varies inversely with operating activities and directly with the maturity of long-lived assets. Finally, we find evidence that supports the taxbased hypothesis but no evidence to support the signaling hypothesis. Moreover, the results demonstrate that there is a significant dynamic component in the determination of optimal debt-maturity structure of the sampled firms .

Keywords: Debt Maturity; Capital Structure; Panel Data; GMM; Pakistan (search for similar items in EconPapers)
JEL-codes: G32 (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (5)

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