University of British Columbia (UBC) - Sauder School of Business; China Academy of Financial Research (CAFR)
Bocconi University - Department of Finance; Bocconi University - BAFFI Center on International Markets, Money, and Regulation
Universitat Pompeu Fabra - Faculty of Economic and Business Sciences; Centre for Economic Policy Research (CEPR)
September 6, 2012
AFA 2012 Chicago Meetings Paper
Journal of Finance, Forthcoming
This paper examines debt structure using a new and comprehensive database on types of debt employed by public U.S. firms. We find that 85% of the sample firms borrow predominantly with one type of debt, and the degree of debt specialization varies widely across different subsamples — large rated firms tend to diversify across multiple debt types, while small unrated firms specialize in fewer types. We suggest several explanations for why debt specialization takes place, and show that firms employing few types of debt have higher bankruptcy costs, are more opaque, and lack access to some segments of the debt markets.
Number of Pages in PDF File: 49
Keywords: debt specialization, debt structure, commercial paper, revolving credit facilities, term loans, senior bonds and notes, subordinate bonds and notes, capital leases
JEL Classification: G32
Date posted: March 19, 2011 ; Last revised: September 7, 2012
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