Pandemic shock, debt maturity structure and corporate performance

Zhenshan Wang, Dandan Feng and Chengcheng Li

Accounting and Finance, 2025, vol. 65, issue 1, 289-321

Abstract: We quantify the magnitude of COVID‐19 pandemic shocks based on a unique data set that describes the number of risk days for the urban areas in China, and empirically examine the mitigating effect of the firm debt maturity structure on its pandemic shocks. We find that extending debt maturity can mitigate the negative impacts of the pandemic and contribute to firms' performance improvement. We further show that a longer debt maturity helps a firm to mitigate the maturity mismatch, to reduce debt financing costs, as well as to alleviate liquidity pressures. In addition, the mitigating effect of debt maturity on the shock is more significant among firms with a higher level of financial constraints and growth. Our study highlights the role of capital structure characteristics in withstanding external shocks.

Date: 2025
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