Abstract

http://ssrn.com/abstract=2087398
 
 

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Why are U.S. Firms Using More Short-Term Debt?


Claudia Custodio


Arizona State University - W. P. Carey School of Business

Miguel A. Ferreira


Nova School of Business and Economics; European Corporate Governance Institute (ECGI)

Luis Laureano


ISCTE - Lisbon University Institute - School of Business

June 19, 2012

Journal of Financial Economics (JFE), Forthcoming

Abstract:     
We show that corporate use of long-term debt has decreased in the U.S. over the past three decades and that this trend is heterogeneous across firms. The median percentage of debt maturing in more than three years decreased from 53% in 1976 to 6% in 2008 for the smallest firms, but did not decrease for the largest firms. The decrease in debt maturity was generated by firms with higher information asymmetry and new firms issuing public equity in the 1980s and 1990s. Finally, we show that demand-side factors do not fully explain this trend and that public debt markets’ supply-side factors play an important role. Our findings suggest that the shortening of debt maturity has increased the exposure of firms to credit and liquidity shocks.

Number of Pages in PDF File: 63

Keywords: corporate debt maturity, information asymmetry, agency costs, new listings, supply effects

JEL Classification: G20, G30, G32

Accepted Paper Series


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Date posted: June 19, 2012  

Suggested Citation

Custodio, Claudia and Ferreira, Miguel A. and Laureano, Luis, Why are U.S. Firms Using More Short-Term Debt? (June 19, 2012). Journal of Financial Economics (JFE), Forthcoming. Available at SSRN: http://ssrn.com/abstract=2087398

Contact Information

Claudia Custodio
Arizona State University - W. P. Carey School of Business ( email )
W. P. Carey School of Business
PO Box 873906
Tempe, AZ 85287-3906
United States
480-965-8074 (Phone)
480-965-8539 (Fax)
HOME PAGE: http://www.public.asu.edu/~cpcustod/
Miguel Almeida Ferreira (Contact Author)
Nova School of Business and Economics ( email )
Campus de Campolide
Lisbon, 1099-032
Portugal
European Corporate Governance Institute (ECGI) ( email )
c/o ECARES ULB CP 114
B-1050 Brussels
Belgium
Luís Laureano
ISCTE - Lisbon University Institute - School of Business ( email )
Avenida das Forças Armadas
Lisboa, 1600-189
Portugal
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