Maturity mismatches of Chinese listed firms

Yizhong Wang, Ting Wang and Lifang Chen

Pacific-Basin Finance Journal, 2021, vol. 70, issue C

Abstract: Maturity mismatches in the financial sector have been extensively examined, but those in non-financial sectors have been largely overlooked. We explore why Chinese listed firms have a high short-term debt ratio from the perspective of asset-debt maturity mismatches, which involve firms using short-term debts to support their long-term investments. We investigate whether the maturity mismatch is actively or passively adopted by Chinese listed firms by analyzing the effect of financial constraints on maturity mismatches. We find that the mismatching behavior is more pronounced for firms with fewer financial constraints, supporting our active mismatch view. Reducing the cost of debt acts as an incentive for firms to actively adopt maturity mismatches. Our study thus identifies one reason for high short-term debt ratios in emerging markets.

Keywords: Maturity mismatch; Financial constraints; Cost of debt (search for similar items in EconPapers)
JEL-codes: G32 G33 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:70:y:2021:i:c:s0927538x21001876

DOI: 10.1016/j.pacfin.2021.101680

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