Download or read book A Gap filling Theory of Corporate Debt Maturity Choice written by Robin Marc Greenwood and published by . This book was released on 2008 with total page 49 pages. Available in PDF, EPUB and Kindle. Book excerpt: "We argue that time-series variation in the maturity of aggregate corporate debt issues arises because firms behave as macro liquidity providers, absorbing the large supply shocks associated with changes in the maturity structure of government debt. We document that when the government funds itself with relatively more short-term debt, firms fill the resulting gap by issuing more long-term debt, and vice-versa. This type of liquidity provision is undertaken more aggressively: i) in periods when the ratio of government debt to total debt is higher; and ii) by firms with stronger balance sheets. Our theory provides a new perspective on the apparent ability of firms to exploit bond-market return predictability with their financing choices"--National Bureau of Economic Research web site

Download or read book A Gap Filling Theory of Corporate Debt Maturity Choice written by Robin M. Greenwood and published by . This book was released on 2010 with total page 51 pages. Available in PDF, EPUB and Kindle. Book excerpt: We argue that time-series variation in the maturity of aggregate corporate debt issues arises because firms behave as macro liquidity providers, absorbing the large supply shocks associated with changes in the maturity structure of government debt. We document that when the government funds itself with relatively more short-term debt, firms fill the resulting gap by issuing more long-term debt, and vice-versa. This type of liquidity provision is undertaken more aggressively: i) in periods when the ratio of government debt to total debt is higher; and ii) by firms with stronger balance sheets. Our theory provides a new perspective on the apparent ability of firms to exploit bond-market return predictability with their financing choices.

Download or read book The Corporate Debt Maturity Choice written by Lina I. Sharara-Taher and published by . This book was released on 1994 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Corporate Debt Maturity Choice in a Transition Economy written by Andreas Stephan and published by . This book was released on 2007 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book The Maturity Structure of Debt written by Fabio Schiantarelli and published by World Bank Publications. This book was released on 1997 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Corporate Debt Maturity Choice in Transition Financial Markets written by Andreas Stephan and published by . This book was released on 2008 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book The Determinants of Corporate Debt Maturity Structure written by Ewa J. Kleczyk and published by . This book was released on 2012 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The Determinants of Corporate Debt Maturity Structure.

Download or read book Determinants of Corporate Debt Maturity in Latin America written by Paulo R. S. Terra and published by . This book was released on 2010 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this paper, I investigate the choice of debt maturity of the firm for a set of countries of Latin America employing dynamic panel data analysis to a sample of 986 non-financial firms from Latin America and 977 from the United States over a 16-year period. Most empirical work in this subject has focused on developed countries, in particular the United States. Also, it is an opportunity to verify the applicability of some of the theories of maturity structure in a multi-country setting. My main findings are that there is a substantial dynamic component in the determination of a firm's maturity structure, firms face moderate adjustment costs towards its optimal maturity, and the determinants of maturity structure and their effects are similar between Latin American countries and the United States, despite obvious differences in the financial and business environments of these countries.

Download or read book An Empirical Analysis of Corporate Debt Maturity Structure written by Aydin Ozkan and published by . This book was released on 1999 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book A Model for Corporate Debt Maturity Decisions written by James Russell Morris and published by . This book was released on 1974 with total page 46 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Financing and Debt Maturity Choices by Undiversified Owner managers written by Jinyi Fu and published by . This book was released on 2006 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine the financing choices of undiversified large shareholders or owner-managers in a continuous time structural model with rational expectations. The interplay between the objective of the undiversified, self-interested owner-manager who controls the firm and the valuation of the firms marketed claims by well-diversified outside investors, has a major impact on leverage and debt maturity choices as well as credit spreads. The effect of this interplay is particularly significant in a world where the representative investor (who determines asset prices in the economy) is risk-averse leading to nonzero market prices of systematic risk and risk premia of the firms investment opportunities. In a perfect information framework with no taxes or bankruptcy costs, we show that, the owner-manager could, depending on the projects characteristics, finance them exclusively with debt, exclusively with equity, or with a combination of equity and debt. Ceteris paribus, leverage increases with the expected growth rate of firm value under its investment opportunities, and decreases with its volatility. Debt maturity varies non-monotonically in a U-shaped manner with the expected growth rate, and decreases with the volatility. Our results reconcile empirical evidence on the variation of financing choices with firm characteristics that is not completely consistent with previous theories. The significant impact of the expected returns (therefore, risk premia) of firms investment opportunities on their leverage ratios, debt maturities, and credit spreads are important implications of our theory that cannot be obtained in these models or in models in which all agents are risk-neutral so that risk premia are zero. We empirically test the implications of our theory for the relationships among firms financing and debt maturity choices and the expected growth rate and volatility of their asset values. Controlling for all the significant determinants of firms financing and debt maturity choices identified by earlier studies, we show significant empirical support for our predictions.

Download or read book Debt Maturity and the Use of Short Term Debt written by Sophia Chen and published by International Monetary Fund. This book was released on 2019-02-05 with total page 77 pages. Available in PDF, EPUB and Kindle. Book excerpt: The maturity structure of debt can have financial and real consequences. Short-term debt exposes borrowers to rollover risk (where the terms of financing are renegotiated to the detriment of the borrower) and is associated with financial crises. Moreover, debt maturity can have an impact on the ability of firms to undertake long-term productive investments and, as a result, affect economic activity. The aim of this paper is to examine the evolution and determinants of debt maturity and to characterize differences across countries.

Download or read book The Debt equity Choice written by Ronald W. Masulis and published by . This book was released on 1988 with total page 168 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Debt Maturity and the Back to the wall Theory of Corporate Finance written by George Fenn and published by . This book was released on 1991 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book The Determinants of Long Term Corporate Debt Issuances written by Dominique C. Badoer and published by . This book was released on 2016 with total page 53 pages. Available in PDF, EPUB and Kindle. Book excerpt: A significant proportion of the debt issued by investment grade firms has maturities greater than 20 years. In this paper we provide evidence that gap-filling behavior is an important determinant of these very long-term issues. Using data on individual corporate debt issues between 1987 and 2009, we find that gap-filling behavior is more prominent in the very long end of the maturity spectrum where the required risk capital makes arbitrage costly. In addition, we find that changes in the supply of long-term government bonds affect not just the choice of maturity but also the overall level of corporate borrowing.

Download or read book The Maturity Structure of Debt Determinants and Effects on Firms Performance Evidence from the United Kingdom and Italy written by Fabio Schiantarelli and published by . This book was released on 1999 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: January 1997 Firms tend to match assets with liabilities, and more profitable firms have more long-term debt. Long-term debt has a positive effect on firms' performance, but this is not true when a large fraction of that debt is subsidized. The authors empirically investigate the determinants and consequences of the maturity structure of debt, using data from a panel of UK and Italian firms. They find that in choosing a maturity structure for debt, firms tend to match assets and liabilities, as both conventional wisdom and some recent theoretical models suggest. They conclude that more profitable firms (as measured by the ratio of cash flow to capital) tend to have more long-term debt. This finding is consistent with the dominant role played by firms' fear of liquidation and loss of control associated with short-term debt. It may also reflect the willingness of financial markets to provide long-term finance only to quality firms. The data do not support the hypothesis that short-term debt, through better monitoring and control, boosts efficiency and growth -rather, the opposite can be concluded. In both countries, the data suggest a positive relationship between initial debt maturity and the firms' subsequent medium-term performance (i.e., profitability and growth in real sales). In both countries total factor productivity (TFP) depends positively on the length of debt maturity when the maturity variable is entered both contemporaneously and lagged. But in Italy the positive effect of the length of maturity on productivity is substantially reduced or even reversed when the proportion of subsidized credit increases. The authors document the relationship between firms' characteristics and their choice of shorter or long-term debt by estimating a maturity equation and interpreting the results in light of insights from theoretical literature, and by analyzing the effects of maturity on firms' later performance in terms of profitability, growth, and productivity; assess how TFP depends on the degree of leverage and the proportion of longer and shorter-term debt; and analyze the relationship between firms' debt maturity and investment. This paper--a product of the Finance and Private Sector Development Division, Policy Research Department--is part of a larger effort in the department to study the effects of financial structure on economic performance. The study was funded by the Bank's Research Support Budget under the research project Term Finance: Theory and Evidence (RPO 679-62).

Download or read book Corporate debt written by George Gregory Farah and published by . This book was released on 1985 with total page 142 pages. Available in PDF, EPUB and Kindle. Book excerpt: