The Determinants of Debt Maturity Structure: Evidence from France, Germany and the UK

TLDR

These countries represent different financial and legal traditions that may influence corporate debt maturity structure. We examine the determinants of the debt maturity structure of French, German and British firms. Our model incorporates factors from tax considerations, liquidity and signalling, and contracting costs, while controlling for capital market conditions. The results confirm most theories for UK firms, show mixed evidence for France and Germany, and overall indicate that firm‑specific factors and national financial systems shape debt maturity structure.

Abstract

Abstract We examine the determinants of the debt maturity structure of French, German and British firms. These countries represent different financial and legal traditions that may have implications on corporate debt maturity structure. Our model incorporates the factors representing three major theories (tax considerations, liquidity and signalling, and contracting costs) of debt maturity. It also controls for capital market conditions. The results confirm the applicability of most theories of debt maturity structure for the UK firms. However, the evidence from France and Germany are mixed. Overall the findings suggest that the debt maturity structure of a firm is determined by firm‐specific factors and the country's financial systems and institutional traditions in which it operates .