Ownership structure and debt maturity: new evidence from Spain

Ownership structure and debt maturity: new evidence from Spain This paper builds upon the scarce evidence about the relationship between ownership structure and debt maturity using a sample of listed Spanish firms. Our results suggest that there is a non monotonic (concave) relationship between long term debt and managerial ownership. Long term debt and managerial ownership relate positively at low levels of managerial ownership and negatively at higher levels. Moreover, the results offer support for the presence of a non-monotonic relationship (concave) between debt maturity and the presence of a large shareholder. The relationship between these variables is positive when the ownership of the large investors is low, and it becomes negative for higher levels of ownership. In addition, our evidence shows that firms use more short term debt when the main shareholder is a bank. We also find that firms use more long term debt when they are smaller and more indebted. In addition, firms take decisions about debt maturity without considering tax effects, but seeking to avoid the term premium on the interest rates. Finally, the results confirm the non-monotonic relationship between long term debt and credit risk identified by Diamond (J Econ 106:709–737, 1991). http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Quantitative Finance and Accounting Springer Journals

Ownership structure and debt maturity: new evidence from Spain

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Publisher
Springer US
Copyright
Copyright © 2009 by Springer Science+Business Media, LLC
Subject
Finance; Corporate Finance; Accounting/Auditing; Econometrics; Operation Research/Decision Theory
ISSN
0924-865X
eISSN
1573-7179
D.O.I.
10.1007/s11156-009-0115-1
Publisher site
See Article on Publisher Site

Abstract

This paper builds upon the scarce evidence about the relationship between ownership structure and debt maturity using a sample of listed Spanish firms. Our results suggest that there is a non monotonic (concave) relationship between long term debt and managerial ownership. Long term debt and managerial ownership relate positively at low levels of managerial ownership and negatively at higher levels. Moreover, the results offer support for the presence of a non-monotonic relationship (concave) between debt maturity and the presence of a large shareholder. The relationship between these variables is positive when the ownership of the large investors is low, and it becomes negative for higher levels of ownership. In addition, our evidence shows that firms use more short term debt when the main shareholder is a bank. We also find that firms use more long term debt when they are smaller and more indebted. In addition, firms take decisions about debt maturity without considering tax effects, but seeking to avoid the term premium on the interest rates. Finally, the results confirm the non-monotonic relationship between long term debt and credit risk identified by Diamond (J Econ 106:709–737, 1991).

Journal

Review of Quantitative Finance and AccountingSpringer Journals

Published: Mar 31, 2009

References

  • Financial ratios, discriminant analysis and the prediction of corporate Bankruptcy
    Altman, E
  • The determinants of debt maturity structure: evidence from France, Germany and UK
    Antoniou, A; Guney, Y; Paudyal, K
  • Ownership and control structure as determinants of corporate debt maturity: a panel study of an emerging market
    Arslan, O; Karan, MB

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