Short-term Corporate Debt Around The World

61 Pages Posted: 3 Apr 2014 Last revised: 12 Oct 2016

See all articles by Marco Sorge

Marco Sorge

World Bank Group - International Finance Corporation

Chendi Zhang

University of Warwick - Finance Group

Kostas Koufopoulos

University of Warwick - Finance Group

Date Written: October 10, 2016

Abstract

Short-term corporate debt as a proportion of total debt issued by public firms varies greatly across countries, between 28% in the U.S. and 78% in China. This paper argues that the interaction between information asymmetry and legal protection of creditors is an important determinant of debt maturity. When short-term debt plays a dual role as signalling and commitment devices, a reduction in information asymmetry has a larger impact on debt maturity when creditor rights are weaker. We find empirical support for this prediction using firm-level data from 45 countries around the world.

Keywords: debt maturity, information sharing, creditor protection, law and finance

JEL Classification: G21, G32

Suggested Citation

Sorge, Marco and Zhang, Chendi and Koufopoulos, Kostas, Short-term Corporate Debt Around The World (October 10, 2016). WBS Finance Group Research Paper . Available at SSRN: https://ssrn.com/abstract=2418899 or http://dx.doi.org/10.2139/ssrn.2418899

Marco Sorge

World Bank Group - International Finance Corporation ( email )

2121 Pennsylvania Avenue, NW
Washington, DC 20433
United States

Chendi Zhang (Contact Author)

University of Warwick - Finance Group ( email )

Gibbet Hill Rd
Coventry, CV4 7AL
Great Britain

Kostas Koufopoulos

University of Warwick - Finance Group ( email )

Gibbet Hill Rd
Coventry, CV4 7AL
Great Britain

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