Title: Financial constraints, corporate debt maturity and firm performance: the case of firms in Southeast Asian countries

Authors: Liem Nguyen; Canh Nguyen

Addresses: University of Economics and Law, VNU-HCM, Ho Chi Minh City, Vietnam ' University of Economics and Law, VNU-HCM, Ho Chi Minh City, Vietnam

Abstract: This paper aims to examine the (nonlinear) link between debt maturity structure and firm performance in five Southeast Asian emerging markets. This nonlinearity could be the cause of the inconsistency in the extant findings on the impact of debt maturity on firm performance. Our research provides evidence supporting a nonlinear relationship between debt maturity structure and firm performance. The results further show that financially constrained firms are more susceptible to liquidity risk when constrained firms are heavily financed by short-term debt, while when these firms employ much long-term debt the agency cost of debt becomes more worrisome. Therefore, compared to unconstrained peers, financially constrained firms are more likely to benefit from the use of long-term debt at short debt maturity structure, but are more prone to be suffering from long-term debt use when the latter firms are already at long debt maturity structure.

Keywords: debt maturity structure; firm performance; Southeast Asian countries; financial constraints.

DOI: 10.1504/AAJFA.2020.104404

Afro-Asian Journal of Finance and Accounting, 2020 Vol.10 No.1, pp.48 - 59

Received: 23 Dec 2017
Accepted: 03 May 2018

Published online: 10 Jan 2020 *

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