Additionally, studies on the capital structure of CEE transition economies report very low long-term debt ratios
, but these have been growing over time (Peev & Yurtoglu, 2007).
In addition to what has already been said, it is worth highlighting that the relationships between the inverse Mill's ratio and short- and long-term debt ratios are statistically significant, whether taking young or old SMEs as the unit of analysis.
On the other hand, old SMEs' greater ability to obtain long-term debt can contribute to a greater magnitude of the adjustments of long-term debt toward target long-term debt ratio. Consequently, old SMEs may follow a financing behavior closer to that predicted by Trade-Off Theory than younger SMEs.
As for the long-term debt ratios of the Taiwanese firms, the ratio of profits to the equity (ROE) is found to be positively effective--contradictory to the negatively hypothesized relation, while it is negatively effective on both short and total debt ratios.
Briefly, the test results for the developed country context show that the model works best for the explanation of the drivers of the total and long-term debt ratios. For the short-term indebtedness, although our tests confirm only four of the six proposed drivers further research may discover some other drivers.
Prior to their bankruptcies, the sample firms have significantly lower operating margins and cash balances, lower market-to-book ratios, higher nondebt tax shields (net operating loss carryforward), higher short- and long-term debt ratios, and substantially higher total debt ratios than their respective industry norms.
Although Chapter 11 firms materially reduce short-term debt while in court, long-term debt ratios and total debt ratios remain significantly higher than industry medians.
(16) We estimated an additional model (untabulated) where we replaced the short-term debt and long-term debt ratios with the total debt ratio.
Examining the maturity of firm's liabilities in thirty developed and developing countries during 1980-1991, Demirguc-Kunt and Maksimovic (1999) find that large firms have higher long-term debt ratios as compared to that of small firms.
To test the relevant theories of debt maturity structure suggested in the literature, we examine the effect of six explanatory variables on long-term debt ratio which is calculated as a ratio of debt maturing in more than year divided by total debt.
Although industry membership is important, the development and growth of the stock market did not affect the long-term debt ratios over the years.
First, our data make it possible for us to directly test the monitoring role of various categories of ownership structures, with different monitoring abilities and legal rights, on sample firms' long-term debt ratios in an environment without a significant external corporate control market.