THE DETERMINANTS OF DEBT MATURITY STRUCTURE IN NIGERIAN FIRMS
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Date
2013
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Abstract
The adoption of an appropriate debt maturity structure by firms among other reasons,
enables the prevention of adverse effects on firm value and cost of capital, allows alignment
of liabilities to assets and addresses underinvestment problems. In view of these reasons,
this study investigates the determinants of debt maturity structure for a sample of 59 nonfinancial
firms in Nigeria for the period, 2003-2012. Using an instrumental variable
technique, the study finds that lagged debt maturity structure, profitability, leverage, and
asset structure exhibit a positive relationship with debt maturity, while growth opportunity
has a negative relationship with debt maturity. The results are robust to endogeneity and
serial correlation issues that are common with dynamic panel studies. The findings are in
support of the contracting/agency cost theory, signalling theory and matching principle
of debt maturity structure.
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Keywords
Debt maturity, generalised method of moment, capital structure