Quotation Choi, Jaewon, Hackbarth, Dirk, Zechner, Josef. 2017. Granularity of Corporate Debt.


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Abstract

We study whether firms spread out debt maturity dates, which we call "granularity of corporate debt.'' In our model, firms that are unable to roll over expiring debt need to liquidate assets. If multiple small asset sales are less inefficient than a single large one, it can be optimal to diversify debt rollovers across time. Using a large sample of corporate bond issuers during the 1991-2012 period, we establish novel stylized facts and evidence consistent with our model's predictions. There is substantial heterogeneity, i.e., firms have both concentrated and dispersed debt structures. Debt maturities are more dispersed for larger and more mature firms, for firms with better investment opportunities, with higher leverage, and with lower profitability. During the recent financial crisis firms with valuable investment opportunities implemented more dispersed maturity structures. Finally, firms manage granularity actively and adjust toward target levels.

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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Working/discussion paper, preprint
Language English
Title Granularity of Corporate Debt
Year 2017
URL https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3055884
JEL G13, G31, G32, G33

Associations

People
Zechner, Josef (Details)
External
Choi, Jaewon (University of Illinois at Urbana-Champaign, United States/USA)
Hackbarth, Dirk (Boston University, United States/USA)
Organization
Institute for Finance, Banking and Insurance IN (Details)
Research Institute for Capital Markets FI (Details)
Research areas (Ă–STAT Classification 'Statistik Austria')
5305 Bank management (Details)
5307 Business and management economics (Details)
5358 Corporate finances (Details)
5361 Financial management (Details)
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