Debt maturity, financial crisis and corporate performance in GCC countries: a dynamic-GMM approach

Abstract

This study investigates the effect of debt financing and debt maturity on corporate performance, using evidence from Gulf Cooperation Council countries (GCC): Qatar, Oman, Kuwait, Kingdom of Saudi Arabia, United Arab Emirates, and Bahrain. The study uses a dynamic GMM approach for an unbalanced sample of 400 firms for the period 2004-2012. The study also investigates the effects of the financial crisis on the significance of long-term and short-term debt financing as determinants of firms' performance. Our findings indicate that the long-term and short-term debt financing affect firms' performance negatively. The results also show that the economic importance of short-term debt increases as a determinant of firms' performance after crisis, while the effect of long-term debt decreases.