The effect of ownership structure on corporate debt maturity choice in China (ID: 8-093)

Debt maturity is one of most important aspects in corporate financing choice which affect corporate financing cost. Previous researches have identified many influential factors of corporate debt maturity such as firm's growth opportunities, free cash flow, assets maturity, risk and corporate size. However, they ignore a key problem related to debt maturity choice, viz. separation of the control right from the right of ownership makes debt maturity away form the optimal level. Therefore, this paper tests how ownership structure impact on debt maturity by taking empirical study on Chinese listed company. we adopt fixed effect model to estimate our regression and run two different kinds of GLS with regressors averaged over four years prior to the base year (1999-2003) in empirical test. The results indicate that firms with more managerial stock ownership have shorter maturities, firms with more state shares and tradable share may issue longer term debt, whereas shorter term debt for firms with more corporation share. These results give a suggestion that completing corporate governance is significant for optimal debt maturity choice.