Tax effect on Spanish SME optimum debt maturity structure

This paper analyzes the influence of the tax effect on small and medium-sized enterprise (SME) debt maturity structure. This study builds a dynamic adjustment model which endogenizes optimum structure and assumes the existence of adjustment costs. Using Spanish data, the model is estimated using a system-GMM regression to a complete panel (11,028 firms) covering 1997–2004. SMEs adjust to their target at a speed of about 37% annually, the equivalent of employing about 20 months to cover only half of the existing gap. This rate is lower than those reported in other similar papers studying large companies with publicly tradable equity.