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Debt Maturity Choice of Nonpublic Italian Firms

Authors


  • I wish to thank the editor Deborah Lucas, two anonymous referees, Marcello Bofondi, Emilia Bonaccorsi di Patti, Amanda Carmignani, Riccardo De Bonis, Andrea Generale, Silvia Giacomelli, Giorgio Gobbi, Luigi Guiso, Sérgio Lagoa, Monica Paiella, Alberto Franco Pozzolo, Luigi Federico Signorini, Giovanni Verga, and seminar participants at the Bank of Italy (2003), the 9th Conference of the Portuguese Society for Research in Economics (Lisbon 2004), and the International Economic Association (Marrakech 2005) for helpful comments. Special thanks go to Paolo Finaldi-Russo, Irene Longhi, and Carmelo Salleo for providing the coefficients of an estimation of the market-to-book ratio for listed firms. The usual disclaimer applies. The views expressed in this paper are those of the author and do not involve the responsibility of the Bank of Italy.

Abstract

This paper focuses on debt maturity of nonpublic Italian firms of small and medium size by international standards and that mainly use bank loans as source of external financing. Compared to few similar studies, the main contributions are that panel estimations allow to control for unobserved firm heterogeneity; firms are also permitted to choose simultaneously leverage and debt maturity. The evidence is that debt maturity is shorter for companies that are riskier and affected by asymmetric information. In areas of the country with poorer legal enforcement, in choosing debt maturity lenders lay greater emphasis on indicators of firm information opacity.

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