Abstract

http://ssrn.com/abstract=1495849
 
 

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Debt Maturity Structure and Credit Quality


Radhakrishnan Gopalan


Washington University in Saint Louis - John M. Olin Business School

Fenghua Song


Pennsylvania State University - Smeal College of Business

Vijay Yerramilli


University of Houston, C. T. Bauer College of Business

January 18, 2013

Journal of Financial and Quantitative Analysis (JFQA), Forthcoming

Abstract:     
We examine whether a firm's debt maturity structure affects its credit quality. Consistent with theory, we find that firms with greater exposure to rollover risk (measured by the amount of long-term debt payable within a year relative to assets) have lower credit quality; long-term bonds issued by those firms trade at higher yield spreads, indicating that bond market investors are cognizant of rollover risk arising from a firm's debt maturity structure. These effects are stronger among firms with a speculative grade rating, declining profi tability, and during recessions.

Number of Pages in PDF File: 43

Keywords: Rollover risk, Debt maturity, Credit rating

JEL Classification: G12, G24, G32

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Date posted: October 29, 2009 ; Last revised: January 28, 2013

Suggested Citation

Gopalan, Radhakrishnan and Song, Fenghua and Yerramilli, Vijay, Debt Maturity Structure and Credit Quality (January 18, 2013). Journal of Financial and Quantitative Analysis (JFQA), Forthcoming. Available at SSRN: http://ssrn.com/abstract=1495849 or http://dx.doi.org/10.2139/ssrn.1495849

Contact Information

Radhakrishnan Gopalan
Washington University in Saint Louis - John M. Olin Business School ( email )
One Brookings Drive
Campus Box 1133
St. Louis, MO 63130-4899
United States
Fenghua Song (Contact Author)
Pennsylvania State University - Smeal College of Business ( email )
University Park, PA 16802
United States
814.863.4905 (Phone)
814.865.3362 (Fax)
HOME PAGE: http://www.personal.psu.edu/fxs16
Vijay Yerramilli
University of Houston, C. T. Bauer College of Business ( email )
Houston, TX 77204
United States
713-743-2516 (Phone)
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