Ownership and control structure as determinants of corporate debt maturity: a panel study of an emerging market

Arslan O., Karan M. B.

CORPORATE GOVERNANCE-AN INTERNATIONAL REVIEW, vol.14, no.4, pp.312-324, 2006 (SSCI) identifier identifier

  • Publication Type: Article / Article
  • Volume: 14 Issue: 4
  • Publication Date: 2006
  • Doi Number: 10.1111/j.1467-8683.2006.00509.x
  • Journal Indexes: Social Sciences Citation Index (SSCI), Scopus
  • Page Numbers: pp.312-324
  • Keywords: debt maturity, concentration of ownership, large shareholder, CAPITAL STRUCTURE, AGENCY PROBLEMS, INVESTOR PROTECTION, INSTITUTIONS, FINANCE, COSTS, CALL, FIRM
  • Hacettepe University Affiliated: Yes


This study highlights the corporate governance potential of debt maturity structure for Turkish firms through investigating its association with ownership and control structure. We model leverage and debt maturity as jointly endogenous under simultaneous equations framework. Firstly, we find that both concentrated ownership structure and presence of a large shareholder is directly but moderately related to corporate debt maturity. We also document that it is important for Turkish firms to match maturity of their assets with maturity of their liabilities. Our findings lend considerable support to the prediction that as firms get financially strong or have more growth opportunities they shorten their corporate debt maturity structure. Moreover, despite having a controlling large shareholder or a concentrated ownership structure, firms with growth opportunities still prefer shorter maturities in order to solve the underinvestment problems. Finally, firm size is positively associated with long-term debt and our empirical analysis provides no evidence that taxes affect debt maturity structure.