Firm life cycle and debt maturity structure: evidence from China

Xiaofei Zhang and Longbing Xu

Accounting and Finance, 2021, vol. 61, issue 1, 937-976

Abstract: This study examines the effect of firm life cycle on debt maturity structure (DMS) in China. We reveal that DMS is relatively low in the introduction and recession periods, while long‐term debt ratio of growth companies is high. Companies in booming industries need funds but have difficulty obtaining long‐term loans, whereas companies in recession can use more long‐term loans. The Chow test shows that DMS changed markedly before and after the new normal of China’s economy and the implementation of the ‘mass entrepreneurship and innovation campaign’. It is urgent to address sunset industries to improve the efficiency of resource allocation.

Date: 2021
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https://doi.org/10.1111/acfi.12600

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