Why Are U.S. Firms Using More Short-Term Debt?
نویسندگان
چکیده
The debt maturity of U.S. industrial firms decreased over the past three decades. This decrease in maturity is driven by the smallest firms for which the median percentage of long-term debt has decreased from 53% in 1976 to 6% in 2008. For large firms, however, debt maturity has not declined. Information asymmetry plays an important role in explaining the decrease in debt maturity, while debt and managerial agency problems do not seem to contribute to the decrease. More interesting, we show that firms are using more short-term debt regardless of their characteristics. This unexpected component of debt maturity is more important than changing firm characteristics in explaining the decline in debt maturity and is a result of the new firms issuing public equity in the 1980s and 1990s. Our findings suggest that the shortening of debt maturity has increased the exposure of firms to credit and liquidity shocks. JEL Classification: G30; G32
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