Mateus, Cesario and Terra, Paulo (2013) Leverage and the maturity structure of debt in emerging markets. Journal of Mathematical Finance, 3. pp. 46-59. ISSN 2162-2434 (Print), 2162-2442 (Online) (doi:10.4236/jmf.2013.33A005)

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Abstract

The aim of this paper is to analyse for a multi-country large emerging market sample the choice between debt and equity simultaneously with the decision between short- and long-term debts. In order to investigate the joint decision among leverage and maturity, we examine an unique sample of 986 firms and 13,490 firm-year observations from Latin America and 686 firms and 7919 firm-year observations from Eastern Europe for the period 1990-2003. We employ dynamic panel data analysis using Generalized Method of moments. The empirical results support three main findings. First, the cross-effects between leverage and maturity behave exactly the opposite between Latin America and Eastern Europe sub-samples. Capital structure and debt maturity are policy complements in Latin America and substitutes in Eastern Europe. Second, there is a significant dynamic effects component in the determination of leverage and maturity. Finally, adjustment to the target maturity is by no means costless and instantaneous with firm facing moderate adjustment costs.

Item Type:	Article
Uncontrolled Keywords:	Capital Structure; Debt Maturity; Dynamic Panel Data Analysis; Latin America; Eastern Europe
Subjects:	H Social Sciences > HJ Public Finance
Faculty / School / Research Centre / Research Group:	Faculty of Business Faculty of Business > Department of Accounting & Finance
Last Modified:	15 Dec 2016 13:20
URI:	http://gala.gre.ac.uk/id/eprint/16101

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