The Impact of Debt Maturity Structure on Equity Returns
Journal: Modern Economics & Management Forum DOI: 10.32629/memf.v6i2.3954
Abstract
Debt financing is more flexible than equity financing, and the debt maturity structure significantly impacts financing costs and risks, as well as corporate operations. Using data from non-financial A-share listed companies in China from 2002 to 2022, this study examines the impact of debt maturity structure (long-term debt / debttotal) on equity returns. Results show a significant positive correlation between debt maturity structure and equity returns. Under a given leverage ratio, high-debt-maturity-structure portfolios deliver higher excess returns than low-debt-maturity-structure portfolios. This research highlights the importance of debt maturity structure in corporate value and financing decisions, providing insights into optimizing corporate capital structure.
Keywords
debt maturity structure, equity return, factor model
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[5] Sharjil H,Richard V.Firms’ rollover risk, capital structure and unequal exposure to aggregate shocks[J].Journal of Corporate Finance,2023,80.
[6]Thomas D,Josef Z.Debt Maturity and the Dynamics of Leverage[J].The Review of Financial Studies,2021,34(12):5796-5840.
[7] Markus B,Arvind K.Corporate Debt Overhang and Credit Policy[J].Brookings Papers on Economic Activity,2021,2020(2):447-502.
[8]Fama F E,French R K.A five-factor asset pricing model[J].Journal of Financial Economics,2015,116(1):1-22.
[9]Li Zhibing, Yang Guangyi, Feng Yongchang, et al. Empirical Test of the Fama-French Five-Factor Model in the Chinese Stock Market [J]. Journal of Finance, 2017, (06): 191-206.
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