Determinants of Corporate Debt Maturity of Indian Firms

Abstract

This study empirically investigates the factors influencing the debt maturity structure of Indian companies. Debt and equity obligations of a firm is clearly portrayed in the capital structure of the firm. Equity tend to remain in business for a long period of time. Now the composition of debt and its maturity is to be decided at the time of designing capital structure, as it helps the firm to make a wise choice between its assets and liabilities, thereby it helps to reduce the cost of capital and other agency costs involved. Certain factors influencing the firm and certain other factors influencing country are identified and investigated in this study. 41 non-financial firms listed on The National Stock Exchange during the period of 2012-19 is considered as sample for the study. A Fixed Effects panel regression analysis is done and the findings state that Firm Size, Operational Cycle, Firm Liquidity, Firm Leverage, and Base Rate are identified as active factors influencing debt maturity structure of Indian firms, whereas Firm Quality and Tax Rates do not influence to a large extent in Indian firms.