World Bank/IFC “Doing Business” database as well as the World Bank Public and Private Credit Registries Surveys. In addition, we obtain the credit registries establishment dates from Miller (2003), Love and Mylenko (2003), and Djankov, McLiesh and Shleifer (2006). The differences in corporate debt maturity structures across countries may reflect varying quality of legal institutions and contracting environments (see Demirguc-Kunt and Maksimovic, 1998). In particular, we control for the impact of the legal framework by including variables on countries’ legal origins, shareholder rights and creditor rights (see LLSV, 1998)<sup>25</sup> , as well as the corruption perception indices provided by Transparency International.

In order to control for the degree of domestic financial development, we use the ratio of total deposits in the financial system to GDP, the ratio of the private bond market capitalization to GDP, and the ratio of overhead costs to bank assets (as a measure of banking sector efficiency) obtained from Beck, Demirguc-Kunt and Levine (2000). In addition, we control for whether or not a country is one of the world’s major financial centers, i.e. US, UK, Switzerland and Japan, and whether or not the country has had a systemic banking crisis as defined in Caprio and Klingebiel (2003).

Macroeconomic variables may also influence firms’ choices of debt maturity. In particular, GDP growth rate is a proxy for the investment opportunity set faced by firms (Smith and Watts, 1992), and the inflation rate provides evidence for firms and banks on whether the local currency is a stable measure of value to be used in long-term contracting. Hence we include among our controls the growth rate of GDP per capita as well as indices of consumer price inflation. A dummy variable is also added to control for any structural differences between developed and developing economies not already captured by other explanatory variables.

> 25 The LLSV shareholder rights variable measures the costs faced by minority investors who want to influence decision-making within the firm. It is obtained by adding a score of one for each of the following elements: (i) shareholders are allowed to vote by mail, (ii) shareholders are not required to deposit their shares with a trustee prior to voting, (iii) the law allows cumulative voting for directors, (iv) the law gives minority shareholders special protection, (v) the minimum percentage of share capital that entitles a shareholder to call for an extraordinary general meeting is less than or equal to 10%, and (vi) shareholders have pre-emptive rights that can only be waived by a shareholder vote. The LLSV creditor rights variable is obtained by adding a score of one for each of the following provisions of creditor protections: (i) the bankruptcy laws prohibit an automatic stay on assets, (ii) secured creditors are permitted to repossess their collateral in bankruptcy, (iii) the bankruptcy law prohibits borrowers from unilaterally obtaining court protection from creditor demands, and (iv) creditors can dismiss managers and replace them with administrators when a firm becomes bankrupt. We use the creditor rights variable reported in Djankov, McLiesh and Shleifer (2006), who introduce time-variations in the index due to reforms of bankruptcy laws.

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