Debt maturity structure

: a comparison between PSI-20 and IBEX 35 non-financial firms and large non-listed firms from Portugal and Spain

Abstract

Financing decisions are fundamental to firms' daily activity and debt maturity plays a crucial role. In this context, the aim of this paper is to identify the most significant differences in debt maturity between Portuguese and Spanish firms and understand the main determinants that affect the corporate decisions of debt maturity. In this study, firms that belong to the stock indexes PSI-20 and IBEX 35 are compared with large non-listed companies from both countries, Portugal, and Spain, individually for 2010 to 2019. The paper follows the methodology of the principal mentors of debt maturity structure of firms, such as Stohs and Mauer (1996), Barclay and Smith (1995), or Ozkan (2002). Using two types of regressions, OLS and Fixed Effects, we tested and compared four sets of companies. The variables are Growth, Profitability, Asset Tangibility, Maturity Matching, and the Debt-to-Equity ratio. Previously during the theory, we explore the pecking order theory, the tradeoff model, the information asymmetries, and agency costs that impact the choice of debts' maturity. The work's main conclusions are that the companies take tax advantages, as the tradeoff theory reports; listed firms prefer more long-term debt than the unlisted firms; unlisted firms use more debt than the listed. Some signs do not comply with the theory, and the variable that better explains the dependent variable, Debt Maturity, is Maturity Matching. The conclusions allow us to understand better the financing decisions made by these firms, especially the determinants of the debt maturity. A comparison like this has never been made before, bringing new information on the subject and to financing literature.

Date of Award	14 Jul 2021
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Luis Pacheco (Supervisor)