Life Cycle Stages and Debt Maturity in Brazilian Listed Companies

Author’s Contribution

LVB: definition of the problem and objective, contextualization of the theme, theoretical review, application of the method, results, analysis and conclusions. VAM: definition of the problem and objective, support in the theoretical review, application of the method, results, analysis and conclusions. BMMP: support in the application of the method, results, analysis and conclusions. HFA: support in the application of the method, results, analysis and conclusions.

Conflicts of interest

The authors declare that there are no conflicts of interest.

	1 Introduction	2 Growth	3 Maturity	4 Turbulence			5 Decline
OCF - Operating cash flow	-	+	+	-	+	+	-	-
ICF - Investment cash flow	-	-	-	-	+	+	+	+
FCF - Financing cash flow	+	+	-	-	+	-	+	-

Variables	LCSs					Note	Total
	Introduction	Growth	Maturity	Turbulence	Decline		µ	σ	CV
	Dif. µ	Dif. µ	Dif. µ	Dif. µ	Dif. µ		µ	σ	CV
DEBTMAT_it	0.025^****	-0.140^******	-0.026^******	0.110^******	0.238^******	10467	0.566	0.310	0.547
ADRT_it	0.433^******	0.160^******	-0.292^******	-0.057	-0.020	4023	6.909	1.013	0.146
RENT_it	0.032^****	-.0061^******	-0.088^******	0.065^******	0.346^******	9738	-0.002	0.438	-219
MTB_it	-3.074	-5.787^******	-6.727^******	-3.346	48.729^******	8942	-2.252	87.985	-39,069
SIZE_it	0.324^******	-0.787^******	-0.588^******	0.727^******	2.318^******	10467	21.49	2.130	0.099
TANG	0.013^**	-0.028^******	-0.034^******	0.060^******	0.077^******	10300	0.269	0.220	0.817
σRES_it	-0.144	-4.092^******	1.031	3.891^****	2.642	9730	1.277	49.193	38.522
TAXB_it	0.098	-0.018	0.047	0.039	-0.286^******	10467	0.221	2.469	11.171
HHI_it	0.005^******	0.001	0.007^******	-0.008^******	-0.020^******	10467	0.035	0.048	1.371
FINCYCLE_it	-0.185^******	0.209^******	0.139^******	-0.205^******	-0.667^******	7237	4.982	0.986	0.197
σIPCA_t						10467	0.016	0.005	0.312
Group						(%)	Error Standard	Confidence interval 95%
Introduction						10.90	0.003	0.103	0.115
Growth						26.80	0.004	0.259	0.276
Maturity						40.10	0.005	0.391	0.410
Turbulence						14.00	0.003	0.134	0.147
Decline						08.30	0.003	0.078	0.088

		Model 1		Model 2
Variables of interest		(DEBTMAT_it)		(ADRT_it)
Growth	(H₁)	0.004	(0.007)	0.020	(0.048)
Maturity	(H₁)	-0.014^**	(0.007)	0.294^******	(0.049)
Turbulence	(H₁)	-0.019^****	(0.009)	0.312^******	(0.062)
Decline	(H₁₎	-0.034^******	(0.010)	0.110	(0.069)
Variables of control
RENT_it	(+)	0.026^****	(0.011)	-0.104	(0.065)
MTB_it	(-)	-0.000	(0.000)	0.002	(0.001)
SIZE_it	(+)	0.074^******	(0.004)	0.109^******	(0.027)
TANG_it	(+)	0.143^******	(0.029)	0.434^****	(0.180)
σRES_it	(-)	3.86 e-05	(3.43 e-05)	0.000	(0.000)
TAXB_it	(+/-)	0.000	(0.000)	-0.002	(0.029)
IHH_it	(-)	0.275	(0.463)	-4.283	(3.969)
FINCYCLE	(+/-)	-0.012^******	(0.004)	0.257^******	(0.034)
σIPCA_it	(-)	-0.846	(4.269)	-15,230	(25.000)
N1_i	(+/-)	0.070^******	(0.027)	0.001	(0.150)
N2_i	(+/-)	0.066^****	(0.031)	-0.004	(0.143)
NM_i	(+/-)	0.087^******	(0.016)	-0.093	(0.090)
Intercept		-0.961^******	(0.118)	3.332^******	(0.752)
Wald (x²)		805.46^******		300.25^******
Comments		6.368		2.982
Number of Companies		261		177
Panel Type		EA		EA
Sector Control		Yes		Yes
Year Control		Yes		Yes
Chow test (Pooled x EF)		28.75^******		16.95^******
Breush-Pagan test (Pooled X EA)		17152.8^******		5877.7^******
Hausman test (EF x EA)		201.78^******		71.64^******
Jarque-Bera test (normality)		71.87		78.78
Average FIV (multicollinearity)		1.475		1.456
Wald test (heteroscedasticity)		5.2 e+29^******		1.8 e+31^******
Wooldridge test (autocorrelation)		467.176^******		70.730^******

{D E B T M A T}_{i t} = β_{0} + \sum_{i = 1}^{4} D_{1} {L C S}_{i t} {+ β}_{1} {R E N T}_{i t} + β_{2} {M T B}_{i t} + β_{3} {S I Z E}_{i t} + β_{4} {T A N G}_{i t} + β_{5} {σ R E S}_{i t} + β_{6} {T A X B}_{i t} + β_{7} {H H I}_{i t} + β_{8} {F I N C Y C L E}_{i t} + β_{9} {σ I P C A}_{t} + \sum_{i = 1}^{3} D_{2} {G O V L E V}_{i t} + \sum_{i = 1}^{9} D_{3} {I N D U S T R Y}_{i} + \sum_{i = 1}^{9} D_{4} {Y E A R}_{i} + ε_{i t}

{A D R T}_{i t} = β_{0} + \sum_{i = 1}^{4} D_{1} {L C S}_{i t} {+ β}_{1} {R E N T}_{i t} + β_{2} {M T B}_{i t} + β_{3} {S I Z E}_{i t} + β_{4} {T A N G}_{i t} + β_{5} {σ R E S}_{i t} + β_{6} {T A X B}_{i t} + β_{7} {H H I}_{i t} + β_{8} {F I N C Y C L E}_{i t} + β_{9} {σ I P C A}_{t} + \sum_{i = 1}^{3} D_{2} {G O V L E V}_{i t} + \sum_{i = 1}^{9} D_{3} {I N D U S T R Y}_{i} + \sum_{i = 1}^{9} D_{4} {Y E A R}_{i} + ε_{i t}

Variable	Description	Operationalization	Signal Expected	Rationale
DEBTMAT_it	Debt Maturity	$\frac{{E F N C}_{i t}}{{P T}_{i t}}$		Fan et al. (2012Fan, J. P. H., Titman, S., & Twite, G. (2012). An international comparison of capital structure and debt maturity choices. Journal of Financial and Quantitative Analysis, 47(1), 23-56. https://doi.org/10.1017/S0022109011000597 https://doi.org/10.1017/S002210901100059... ); Kirch and Terra (2012Kirch, G., & Terra, P. R. S. (2012). Determinants of corporate debt maturity in South America: Do institutional quality and financial development matter? Journal of Corporate Finance, 18(4), 980-993. https://doi.org/10.1016/j.jcorpfin.2012.05.004 https://doi.org/10.1016/j.jcorpfin.2012.... ) and Orman and Köksal (2017Orman, C., & Köksal, B. (2017). Debt maturity across firm types: Evidence from a major developing economy. Emerging Markets Review, 30, 169-199. https://doi.org/10.1016/j.ememar.2016.12.001 https://doi.org/10.1016/j.ememar.2016.12... )
ADRT_it	Average Debt Repayment Term	$l n [\frac{(\frac{{E F T}_{i t} + {E F T}_{i t - 1}}{2})}{{C E F T}_{i t}} * 360]$		Adapted from Penman (2013Penman, S. (2013). Análise das demonstrações financeiras e security valuation. Elsevier.)
RENT_it	Profitability	$\frac{{E B I T D A}_{i t}}{{A T}_{i t}}$	(+)	Kayo and Kimura (2011Kayo, E. K., & Kimura, H. (2011). Hierarchical determinants of capital structure. Journal of Banking & Finance, 35(2), 358-371. https://doi.org/10.1016/j.jbankfin.2010.08.015 https://doi.org/10.1016/j.jbankfin.2010.... ); Kirch and Terra (2012Kirch, G., & Terra, P. R. S. (2012). Determinants of corporate debt maturity in South America: Do institutional quality and financial development matter? Journal of Corporate Finance, 18(4), 980-993. https://doi.org/10.1016/j.jcorpfin.2012.05.004 https://doi.org/10.1016/j.jcorpfin.2012.... ) and Fan et al. (2012Fan, J. P. H., Titman, S., & Twite, G. (2012). An international comparison of capital structure and debt maturity choices. Journal of Financial and Quantitative Analysis, 47(1), 23-56. https://doi.org/10.1017/S0022109011000597 https://doi.org/10.1017/S002210901100059... )
MTB_it	Market-to-book	$\frac{{V M A}_{i t}}{{P L A}_{i t}}$	(-)	Kayo and Kimura (2011Kayo, E. K., & Kimura, H. (2011). Hierarchical determinants of capital structure. Journal of Banking & Finance, 35(2), 358-371. https://doi.org/10.1016/j.jbankfin.2010.08.015 https://doi.org/10.1016/j.jbankfin.2010.... ); Kirch and Terra (2012Kirch, G., & Terra, P. R. S. (2012). Determinants of corporate debt maturity in South America: Do institutional quality and financial development matter? Journal of Corporate Finance, 18(4), 980-993. https://doi.org/10.1016/j.jcorpfin.2012.05.004 https://doi.org/10.1016/j.jcorpfin.2012.... ); Fan et al. (2012Fan, J. P. H., Titman, S., & Twite, G. (2012). An international comparison of capital structure and debt maturity choices. Journal of Financial and Quantitative Analysis, 47(1), 23-56. https://doi.org/10.1017/S0022109011000597 https://doi.org/10.1017/S002210901100059... )
SIZE_it	Size	ln(AT_it)	(+)	Stephan et al. (2011Stephan, A., Talavera, O., & Tsapin, A. (2011). Corporate debt maturity choice in emerging financial markets. The Quarterly Review of Economics and Finance, 51(2), 141-151. https://doi.org/10.1016/j.qref.2010.12.003 https://doi.org/10.1016/j.qref.2010.12.0... ); Kirch and Terra (2012Kirch, G., & Terra, P. R. S. (2012). Determinants of corporate debt maturity in South America: Do institutional quality and financial development matter? Journal of Corporate Finance, 18(4), 980-993. https://doi.org/10.1016/j.jcorpfin.2012.05.004 https://doi.org/10.1016/j.jcorpfin.2012.... ) and Orman and Köksal (2017Orman, C., & Köksal, B. (2017). Debt maturity across firm types: Evidence from a major developing economy. Emerging Markets Review, 30, 169-199. https://doi.org/10.1016/j.ememar.2016.12.001 https://doi.org/10.1016/j.ememar.2016.12... )
TANG_it	Tangibility of assets	$\frac{{A I}_{i t}}{{A T}_{i t}}$	(+)	Kayo and Kimura (2011Kayo, E. K., & Kimura, H. (2011). Hierarchical determinants of capital structure. Journal of Banking & Finance, 35(2), 358-371. https://doi.org/10.1016/j.jbankfin.2010.08.015 https://doi.org/10.1016/j.jbankfin.2010.... ); Kirch and Terra (2012Kirch, G., & Terra, P. R. S. (2012). Determinants of corporate debt maturity in South America: Do institutional quality and financial development matter? Journal of Corporate Finance, 18(4), 980-993. https://doi.org/10.1016/j.jcorpfin.2012.05.004 https://doi.org/10.1016/j.jcorpfin.2012.... ); Fan et al. (2012Fan, J. P. H., Titman, S., & Twite, G. (2012). An international comparison of capital structure and debt maturity choices. Journal of Financial and Quantitative Analysis, 47(1), 23-56. https://doi.org/10.1017/S0022109011000597 https://doi.org/10.1017/S002210901100059... )
σRES_it	Volatility in results	$\{\frac{σ \frac{E B I T D A}{A T}}{[\frac{(\frac{{E B I T D A}_{i t}}{{A T}_{i t}} + \frac{{E B I T D A}_{i t - 1}}{{A T}_{i t - 1}})}{2}]}\}$	(-)	Stephan et al. (2011Stephan, A., Talavera, O., & Tsapin, A. (2011). Corporate debt maturity choice in emerging financial markets. The Quarterly Review of Economics and Finance, 51(2), 141-151. https://doi.org/10.1016/j.qref.2010.12.003 https://doi.org/10.1016/j.qref.2010.12.0... ); Kirch and Terra (2012Kirch, G., & Terra, P. R. S. (2012). Determinants of corporate debt maturity in South America: Do institutional quality and financial development matter? Journal of Corporate Finance, 18(4), 980-993. https://doi.org/10.1016/j.jcorpfin.2012.05.004 https://doi.org/10.1016/j.jcorpfin.2012.... ) and Orman and Köksal (2017Orman, C., & Köksal, B. (2017). Debt maturity across firm types: Evidence from a major developing economy. Emerging Markets Review, 30, 169-199. https://doi.org/10.1016/j.ememar.2016.12.001 https://doi.org/10.1016/j.ememar.2016.12... )
TAXB_it	Tax Burden	$\frac{{T P}_{i t}}{{L A I R}_{i t}}$	(+/-)	Stephan et al. (2011Stephan, A., Talavera, O., & Tsapin, A. (2011). Corporate debt maturity choice in emerging financial markets. The Quarterly Review of Economics and Finance, 51(2), 141-151. https://doi.org/10.1016/j.qref.2010.12.003 https://doi.org/10.1016/j.qref.2010.12.0... ); Fan et al. (2012Fan, J. P. H., Titman, S., & Twite, G. (2012). An international comparison of capital structure and debt maturity choices. Journal of Financial and Quantitative Analysis, 47(1), 23-56. https://doi.org/10.1017/S0022109011000597 https://doi.org/10.1017/S002210901100059... ) and Orman and Köksal (2017Orman, C., & Köksal, B. (2017). Debt maturity across firm types: Evidence from a major developing economy. Emerging Markets Review, 30, 169-199. https://doi.org/10.1016/j.ememar.2016.12.001 https://doi.org/10.1016/j.ememar.2016.12... )
HHI_it	Herfindhal-Hirschman Index	$[\frac{({S Q}_{i t} - \frac{1}{n})}{(1 - \frac{1}{n})}]$	(-)	Kayo and Kimura (2011Kayo, E. K., & Kimura, H. (2011). Hierarchical determinants of capital structure. Journal of Banking & Finance, 35(2), 358-371. https://doi.org/10.1016/j.jbankfin.2010.08.015 https://doi.org/10.1016/j.jbankfin.2010.... ); Smith et al. (2015Smith, D. J., Chen, J., & Anderson, H. D. (2015). The influence of firm financial position and industry characteristics on capital structure adjustment. Accounting & Finance, 55(4), 1135-1169. https://doi.org/10.1111/acfi.12083 https://doi.org/10.1111/acfi.12083... )
FINCYCLE_it	Financial Cycle	ln(PMREC_it - PMPFORN_it)	(+/-)	Adapted from Penman (2013Penman, S. (2013). Análise das demonstrações financeiras e security valuation. Elsevier.)
σIPCA_t	Volatility in inflation	$\frac{σ {I P C A}_{t}}{μ {I P C A}_{t}}$	(-)	Kirch and Terra (2012Kirch, G., & Terra, P. R. S. (2012). Determinants of corporate debt maturity in South America: Do institutional quality and financial development matter? Journal of Corporate Finance, 18(4), 980-993. https://doi.org/10.1016/j.jcorpfin.2012.05.004 https://doi.org/10.1016/j.jcorpfin.2012.... ); Fan et al. (2012Fan, J. P. H., Titman, S., & Twite, G. (2012). An international comparison of capital structure and debt maturity choices. Journal of Financial and Quantitative Analysis, 47(1), 23-56. https://doi.org/10.1017/S0022109011000597 https://doi.org/10.1017/S002210901100059... )
GOVLEVEL_it	Corporate Governance Level	Dummy variable that assumes value 1 for each corporate governance level in year t, 0 for the others.	(+/-)	Kirch and Terra (2012Kirch, G., & Terra, P. R. S. (2012). Determinants of corporate debt maturity in South America: Do institutional quality and financial development matter? Journal of Corporate Finance, 18(4), 980-993. https://doi.org/10.1016/j.jcorpfin.2012.05.004 https://doi.org/10.1016/j.jcorpfin.2012.... )
INDUSTRY_i	Economic Segment	Dummy variable that assumes value 1 for each industry in year t, 0 for the others.	(+/-)	Kirch and Terra (2012Kirch, G., & Terra, P. R. S. (2012). Determinants of corporate debt maturity in South America: Do institutional quality and financial development matter? Journal of Corporate Finance, 18(4), 980-993. https://doi.org/10.1016/j.jcorpfin.2012.05.004 https://doi.org/10.1016/j.jcorpfin.2012.... )
YEARS_it	Control of the years	Dummy variable that assumes value 1 for each year t, 0 for the others.	(+/-)	Kirch and Terra (2012Kirch, G., & Terra, P. R. S. (2012). Determinants of corporate debt maturity in South America: Do institutional quality and financial development matter? Journal of Corporate Finance, 18(4), 980-993. https://doi.org/10.1016/j.jcorpfin.2012.05.004 https://doi.org/10.1016/j.jcorpfin.2012.... )

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Life Cycle Stages and Debt Maturity in Brazilian Listed Companies

ABSTRACT