Debt maturity and corporate investment

This paper uses all A share data of China's listed companies from 1999 to 2003 to analyze the relationship between the debt maturity and investment, and the governance effectiveness of short and long term debts. We found that the investment and debt finance is the inversely correlated. Under the different project risk, the influence between the debt maturity and investment is different. For the low group, the longer the maturity is, the easier underinvestment occurs, and for the high group the longer the maturity is, the easier overinvestment appears. Shortening the debt maturity is one effective way of mitigating inefficient investment.