The Determinants of Corporate Debt Mix

Quarterly Journal of Finance and Accounting (Forthcoming)

Posted: 27 Sep 2011 Last revised: 23 Sep 2015

See all articles by Tao-Hsien Dolly King

Tao-Hsien Dolly King

University of North Carolina (UNC) at Charlotte - Department of Finance

Kenneth Khang

Idaho State University

Hung Viet Nguyen

University of North Carolina (UNC) at Charlotte

Date Written: December 1, 2011

Abstract

We examine the drivers of the choice among non-bank private (144A) debt, bank loans, and public debt made by 988 non-financial firms during 1993-2007. We document new evidence that, besides firm-level variables, macroeconomic factors are important determinants of changes in corporate debt mix. Our findings highlight the importance of macroeconomic variables on firms’ borrowing decisions as predicted by Diamond (1991). Most importantly, we find that the majority of the drivers of changes in corporate debt mix vary over time and across economic conditions, which would address the concern of Denis and Mihov (2003) about their sample’s inability to examine the pattern of debt mix over time. We also find strong evidence that private debt and public debt are substitutes as widely hypothesized, which is inconsistent with Rauh and Sufi (2010).

Suggested Citation

King, Tao-Hsien Dolly and Khang, Kenneth and Nguyen, Hung Viet, The Determinants of Corporate Debt Mix (December 1, 2011). Quarterly Journal of Finance and Accounting (Forthcoming). Available at SSRN: https://ssrn.com/abstract=1934538 or http://dx.doi.org/10.2139/ssrn.1934538

Tao-Hsien Dolly King

University of North Carolina (UNC) at Charlotte - Department of Finance ( email )

9201 University City Boulevard
Charlotte, NC 28223
United States
704-687-7652 (Phone)
704-687-6987 (Fax)

Kenneth Khang

Idaho State University ( email )

921 South 8th Avenue
Pocatello, ID 83209
United States

Hung Viet Nguyen (Contact Author)

University of North Carolina (UNC) at Charlotte ( email )

9201 University City Boulevard
Charlotte, NC 28223
United States

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