Determinants of Debt Maturity in Non Financial Firms (Pakistan Stock Exchange)

Author(s)

Dr. Liaqat Ali , Zia ul Islam , Muhammad Arif Shah , Dr. Naveed Shehzad ,

Download Full PDF Pages: 65-72 | Views: 549 | Downloads: 160 | DOI: 10.5281/zenodo.4990530

Volume 9 - October 2020 (10)

Abstract

The paper has examined the determinants of debt maturity structure. The study has been carried out in the non-financial firms in Pakistan Stock Exchange. The study has collected data for listed 224 firms from 2010 to 2019. The study has used different models to estimate different determinants of debt maturity. The findings reveal that the agency cost hypotheses has been supported by the existing results. The firms always match the assets maturity with their debt maturity which saves them from the liquidity risk and also from future financial issues. The matching of assets and debts controls the agency problem and also the conflict among the firm and creditors. The tax hypotheses argued that the higher tax rate in the market will lead to have higher usage of debt instruments. The result shows that there is a negative relationship with the firm quality and debt maturity. The finding recommends that the non-financial firms in Pakistan will prefer to use debts as compared to equity due to the tax yield. The firms are trying to increase their assets as they will give them more shields to complete their claims in future. 

Keywords

Debt maturity, assets quality, firm size, non-financial, OLS, GMM etc

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