scholarly journals Debt and financial performance of SMEs: The missing role of debt maturity structure.

2013 ◽  
Vol 10 (3) ◽  
pp. 354-365 ◽  
Author(s):  
Hayam Wahba
Keyword(s):  
Financial Performance ◽  
Opposite Effect ◽  
Debt Maturity ◽  
Random Effects Model ◽  
Short Term ◽  
Debt Maturity Structure ◽  
Maturity Structure ◽  
The Relationship

This paper focuses on an important issue, which has generally received less attention in SMEs literature, being the effect of debt maturity structure on financial performance. The random effects model, as a panel data technique, is used to examine the relationship between debt and various measures of financial performance. The results reveal that it is not the level of leverage that determines financial performance, but rather the debt maturity structure. Specifically, the findings demonstrate that short-term debt and long-term debt have an opposite effect on financial performance and therefore tend to cancel out. This is the first study, to the best of knowledge, which offers empirical evidence regarding debt maturity structure not only in SMEs context, but also from an Egyptian perspective.

Analyzing the impact of board vigilance on financial distress through the intervention of leverage structure and interaction of asset tangibility in the non-financial sector of Pakistan

2021 ◽  
pp. 2150004
Author(s):  
Wen Xuezhou ◽  
Rana Yassir Hussain ◽  
Haroon Hussain ◽  
Muhammad Saad ◽  
Sikander Ali Qalati
Keyword(s):  
Capital Structure ◽  
Financial Distress ◽  
Ordinary Least Squares ◽  
Debt Maturity ◽  
Financial Firms ◽  
Debt Maturity Structure ◽  
Maturity Structure ◽  
The Impact ◽  
The Relationship

This study focuses on the relationship between board vigilance and financial distress in non-financial firms listed on the Pakistan Stock Exchange (PSX). The mediating role of leverage structure and moderating role of asset tangibility is also studied following Baron and Kenney’s approach. The study analyzed the data of 284 firms ranging from 2013 to 2017 by using ordinary least squares (OLS) and panel corrected standard errors (PCSE) regressions. The study revealed that the debt maturity structure mediates the relationship between board independence and financial distress and between CEO non-duality and financial distress but the capital structure did not mediate any of the stated relationships. Similarly, asset tangibility negatively moderated the relationship between debt maturity and financial distress. However, there was no such moderation detected between the relationship of capital structure and financial distress. The results remained consistent throughout the analysis with both regression techniques. These results suggest using more long-term debt in debt maturity structure to have control over financial distress and also to reduce the reliance on non-productive tangible assets in the asset structure of non-financial firms of Pakistan.

The effect of franchising on debt maturity in the US restaurant industry

2016 ◽  
Vol 22 (6) ◽  
pp. 1404-1422 ◽  
Author(s):  
Kwanglim Seo
Keyword(s):  
Restaurant Industry ◽  
Debt Maturity ◽  
Corporate Debt ◽  
Publicly Traded ◽  
Short Term ◽  
Debt Maturity Structure ◽  
Maturity Structure ◽  
The Us ◽  
Restaurant Firms ◽  
The Relationship

With franchising as an efficient means of growth and expansion, this study aims to explore how franchising can influence corporate debt maturity structure in the US restaurant industry. The purpose of this study is to investigate (1) the effect of franchising on debt maturity structure, (2) the relationship between leverage and short-term debt, and (3) the moderating effect of franchising on the relationship between short debt maturity and leverage in the US restaurant industry. Analyzing panel data on publicly traded US restaurant firms, this study showed that franchising could be an important determinant of the maturity structure of corporate debt. Empirical evidence suggests that restaurant firms pursuing growth and expansion through franchising should take into consideration the effect of franchising on the debt maturity structure when making capital structure decisions.

Labor lawsuits and debt maturity

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Omer Unsal
Keyword(s):  
Chief Executive ◽  
Debt Maturity ◽  
Employee Relations ◽  
Short Term ◽  
Content Type ◽  
Negative Effect ◽  
Debt Market ◽  
Legal Fees

Purpose This paper aims to investigate how firms’ relationships with employees define their debt maturity. The authors empirically test the role of employee litigations in influencing firms’ choice of short-term versus long-term debt. The authors study employee relations by analyzing the importance of the workplace environment on capital structure. Design/methodology/approach The author’s test hypotheses using a sample of US publicly traded firms between 2000 and 2017, including 3,056 unique firms with 4,256 unique chief executive officer, adopting the fixed effect panel model. Findings The authors document that employee litigations have a significant negative effect on the use of short-term debt and a significant positive affect on long-term debt. Employee litigations, along with legal fees, outcomes and charging parties, matter the most in explaining debt maturity. In addition, frequently sued firms abandon the short-term debt market and use less shareholders’ equity to finance their operations while relying more on the longer debt market. Originality/value To the best of the authors’ knowledge, this is the first study to examine the role of employee mistreatment in debt maturity choice. The study extends the lawsuit and finance literature by examining unique, hand-collected data sets of employee lawsuits, allegations, violations, settlements, charging parties, case outcomes and case durations.

The impact of cash flow volatility on firm leverage and debt maturity structure: evidence from China

2018 ◽  
Vol 8 (1) ◽  
pp. 69-91 ◽  
Author(s):  
Zulfiqar Ali Memon ◽  
Yan Chen ◽  
Muhammad Zubair Tauni ◽  
Hashmat Ali
Keyword(s):  
Standard Deviation ◽  
Cash Flow ◽  
Cash Flows ◽  
Debt Maturity ◽  
Percent Reduction ◽  
Content Type ◽  
Debt Maturity Structure ◽  
Maturity Structure ◽  
Cash Flow Volatility

Purpose The purpose of this paper is to investigate the influence of cash flow volatility on firm’s leverage levels. It also analyzes how cash flow volatility influences the debt maturity structure for the Chinese listed firms. Design/methodology/approach The authors construct the measure for cash flow variability as five-year rolling standard deviation of the cash flow from operations. The authors use generalized linear model approach to determine the effect of volatility on leverage. In addition, the authors design a categorical debt maturity variable and assign categories depending upon firm’s usage of debt at various maturity levels. The authors apply Ordered Probit regression to analyze how volatility affects firm’s debt maturity structure. The authors lag volatility and other independent variables in the estimation models so as to eliminate any possible endogeneity problems. Finally, the authors execute various techniques for verifying the robustness of the main findings. Findings The authors provide evidence that higher volatility of cash flows results in lower leverage levels, while the sub-sampling analysis reveals that there is no such inverse association in the case of Chinese state-owned enterprises. The authors also provide novel findings that irrespective of the ownership structure, firms facing high volatility choose debt of relatively shorter maturities and vice versa. Overall, a rise of one standard deviation in volatility causes 8.89 percent reduction in long-term market leverage ratio and 26.62 percent reduction in the likelihood of issuing debentures or long-term notes. Research limitations/implications This study advocates that cash flow volatility is an essential factor for determining both the debt levels and firm’s term-to-maturity structure. The findings of this study can be helpful for the financial managers in maintaining optimal leverage and debt maturity structure, for lenders in reducing their risk of non-performing loans and for investors in their decision-making process. Originality/value Existing empirical literature regarding the influence of variability of cash flows on leverage and debt maturity structure is inconclusive. Moreover, prior research studies mainly focus only on the developed countries. No previous comprehensive study exists so far for Chinese firms in this regard. This paper endeavors to fulfill this research gap by furnishing novel findings in the context of atypical and distinctive institutional setup of Chinese firms.

Debt Maturity Structure and Credit Quality

2014 ◽  
Vol 49 (4) ◽  
pp. 817-842 ◽  
Author(s):  
Radhakrishnan Gopalan ◽  
Fenghua Song ◽  
Vijay Yerramilli
Keyword(s):  
Bond Market ◽  
Debt Maturity ◽  
Yield Spreads ◽  
Credit Quality ◽  
Debt Maturity Structure ◽  
Rollover Risk ◽  
Maturity Structure

AbstractWe examine whether a firm’s debt maturity structure affects its credit quality. Consistent with theory, we find that firms with greater exposure to rollover risk (measured by the amount of long-term debt payable within a year relative to assets) have lower credit quality; long-term bonds issued by those firms trade at higher yield spreads, indicating that bond market investors are cognizant of rollover risk arising from a firm’s debt maturity structure. These effects are stronger among firms with a speculative-grade rating and declining profitability, and during recessions.

On the Signalling Role of Debt Maturity

2006 ◽  
Vol 6 (1) ◽  
Author(s):  
Robert Lensink ◽  
Thi Thu Tra Pham
Keyword(s):  
Commercial Bank ◽  
Debt Maturity ◽  
Short Term ◽  
Debt Contracts ◽  
High Quality ◽  
Model Simulations ◽  
Secured Debt ◽  
Unsecured Debt

This paper focuses on the signalling role of debt maturity. The main novelty of the paper is that it analyzes a setting in which high quality firms use collateral as a complementary device along with debt maturity to signal their superiority. Model simulations suggest a non-monotonic relationship between firm quality and debt maturity, in which high quality firms have both long-term secured debt and short-term secured or non-secured debt and low quality firms have long-term unsecured debt. We provide some empirical evidence for this result based on debt contracts of the Asia Commercial Bank.

scholarly journals Footprint of Personality Characteristics on Financing Objectives: The Arbitrating capacity of Risk Attitude and the Moderating capacity of Investment Savvy

2021 ◽  
Vol 6 (4) ◽  
pp. 163-169
Author(s):  
Javed Hussain ◽  
Tariq Mehmood Dar ◽  
Neelofer Tariq
Keyword(s):  
Risk Attitude ◽  
Personality Characteristics ◽  
Short Term ◽  
Long Run ◽  
Dependent Variables ◽  
Relationship Of ◽  
The Relationship ◽  
Moderating Role

The following study clarifies the role of risk attitude in revolving the relationship between Financing Objectives and personality characteristics and the moderating role of investment savvy between risk attitude and financing objectives by the particular sample size of 200 students. The participants of the study belonged from finance background. To simplify the collected data, the regression analyses was utilized in a flow to implicate the effect upon the dependent variables of the independent variables. To get more enhanced results, the mediator and the moderator were uplifted. Hence by, the results revealed that individuals who are activity, determined, and sympathy towards others are more willing to opt for STFO (short term financing objectives). Whilst, in long run extraversion, openness to experience and agreeableness, and conscientiousness traits are more inclined towards LTFO (long term financing objectives). Moreover, the study further mentions that STFO and LTFO are not much affected by investment savvy of an individuals. Nonetheless, the investment savvy is not really bothered by the relationship of financing objectives and risk attitude.

scholarly journals Earnings management and debt maturity: Evidence from Italy

2020 ◽  
Vol 17 (3) ◽  
pp. 179-186 ◽  
Author(s):  
Andrea Rey ◽  
Danilo Tuccillo ◽  
Fabiana Roberto
Keyword(s):  
Earnings Management ◽  
Academic Community ◽  
Debt Maturity ◽  
Accrual Quality ◽  
Debt Maturity Structure ◽  
Total Debt ◽  
Maturity Structure ◽  
Decision Making Processes ◽  
One Year

In this work, we examine whether earnings management affects the debt maturity structure of Italian non-SMEs. We employ accruals quality as a proxy for earnings management. We measure the accrual quality as the absolute value of residual reflects the accruals that are not related to cash flow realized in the current, following or previous year. We measure the debt maturity in two ways. First, we consider it as a dummy variable that takes the value equal to 1 if some of the debt is long-term (exceeding one year), and 0 otherwise. Second, we compute the debt maturity as the ratio of long-term debt to total debt. We employ a quantitative approach, carrying out several regressions (probit, logit, and tobit) analyses to investigate the effect earnings management on debt maturity structure, using financial statement data of 1,001 Italian non-SMEs sampled over the period 2011-2017. This paper provides theoretical and practical findings that support the literature on earnings management. First, the study confirms that accrual quality can use as a proxy of earnings management by the academic community. Then the findings show that earnings management is negatively associated with the possibility to access to long-term debt, and with a proportion of long-term debt in total debt. This evidence may support the managers when they have to plan the financial structure, the lenders and the creditors in their decision-making processes, and the policymakers when they have to set programs aimed to make easier the access to external financial resources.

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