In this paper, we analyze empirically the effects of debt maturity on leverage in the context of underinvestment problems and liquidity risk of firms listed on Korea Exchange. In terms of methodology, we develop the simultaneous equations model that integrates leverage and debt maturity model. The main results of this study can be summarized as follows. Debt maturity has a significant and positive effect on leverage. This result supports the liquidity risk hypothesis that predicts a positive relation between debt maturity and leverage(Diamond, 1991 and 1993). Growth opportunities have a significant and negative effect on leverage. This result provides strong support for the underinvestment hypothesis(Myers, 1977). Interaction variable between debt maturity and growth opportunities has a significant and negative effect on leverage, implying that for high growth firms, the overall positive relation between debt maturity and leverage may become weaker. With respect to the overall effect of debt maturity itself and the interaction between debt maturity and growth opportunities on leverage, debt maturity has a significant and positive effect on leverage. The liquidity risk effects of debt maturity on leverage should be more important for lower credit quality firms and firms that cannot easily lengthen their debt maturity. Low credit quality firms that face greater liquidity risk may demand longer term debt to reduce this risk, but find no lenders willing to supply it at reasonable cost. In contrast, higher credit quality firms likely face lower liquidity risk, and can also borrow longer term debt if liquidity risk concerns do arise. For lower credit quality firms, the relatively large liquidity risk effect outweighs the attenuation effect of underinvestment problems so that the net effect of shortening debt maturity on leverage is negative. Thus, lower credit quality firms can try to attenuate the negative effect of growth opportunities by shortening debt maturity, but on the end this does not increase leverage. On the contrary, the negative direct effect of the increased liquidity risk on leverage more than offsets the positive attenuation effect, producing a net reduction in leverage. These results are consistent with Mauer and Ott's(1998) theoretical model in which firms that shorten debt maturity to reduce underinvestment problems can also reduce leverage to avoid liquidity risk. For higher credit quality firms, the positive effect of reducing underinvestment problems outweighs the effect of increasing liquidity risk so that the net effect of shortening debt maturity on leverage is positive. Thus, higher credit quality firms can shorten debt maturity to reduce underinvestment problems without having to reduce leverage because of liquidity risk. Leverage has a significant and positive effect on debt maturity, which is consistent with the result in the leverage model. It provides further evidence that high liquidity risk caused by high leverage policy can be moderated by longer term debt maturity and that longer term(shorter term) debt maturity and high(low) leverage can be used as supplementary strategies to avoid the threat of suboptimal liquidation. Growth opportunities have a significant and negative effect on debt maturity. This suggests that there is economic relation between growth opportunities and debt maturity. Interaction variable between leverage and growth opportunities has a significant and positive effect on leverage, implying that for high growth firms, the overall positive relation between leverage and debt maturity may become stronger. With respect to the overall effect of leverage itself and the interaction between leverage and growth opportunities on debt maturity, leverage has a significant and positive effect on debt maturity. In conclusion, it is necessary to examine the potential dynamics of debt maturity on leverage in the context of underinvestment problems and liquidity risk. Our results provide a number of fresh insights into the overall effects of debt maturity on leverage and the interactions between debt maturity and growth opportunities on leverage. This paper may have a few limitations because it may be an only early study about the effects of debt maturity on leverage in the context of underinvestment problems and liquidity risk of Korean firms. Therefore, we think that it is necessary to expand sample firms and control variables, and use more elaborate analysis methods in the future studies.