49 Pages Posted: 19 Mar 2011 Last revised: 7 Sep 2012
Date Written: September 6, 2012
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.
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
Suggested Citation: Suggested Citation