The Determinants of Long-Term Corporate Debt Issuances

53 Pages Posted: 31 May 2012 Last revised: 26 Apr 2016

See all articles by Dominique C. Badoer

Dominique C. Badoer

University of Illinois at Chicago - Department of Finance

Christopher M. James

University of Florida - Department of Finance, Insurance and Real Estate

Date Written: June 30, 2014

Abstract

A significant proportion of the debt issued by investment grade firms has maturities greater than 20 years. In this paper we provide evidence that gap-filling behavior is an important determinant of these very long-term issues. Using data on individual corporate debt issues between 1987 and 2009, we find that gap-filling behavior is more prominent in the very long end of the maturity spectrum where the required risk capital makes arbitrage costly. In addition, we find that changes in the supply of long-term government bonds affect not just the choice of maturity but also the overall level of corporate borrowing.

Keywords: Debt maturity, gap filling, market segmentation

JEL Classification: G32

Suggested Citation

Badoer, Dominique C. and James, Christopher M., The Determinants of Long-Term Corporate Debt Issuances (June 30, 2014). Journal of Finance, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2071336 or http://dx.doi.org/10.2139/ssrn.2071336

Dominique C. Badoer

University of Illinois at Chicago - Department of Finance ( email )

2431 University Hall (UH)
601 S. Morgan Street
Chicago, IL 60607-7124
United States

Christopher M. James (Contact Author)

University of Florida - Department of Finance, Insurance and Real Estate ( email )

P.O. Box 117168
Gainesville, FL 32611-7168
United States
352-392-3486 (Phone)
352-392-0301 (Fax)

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