Debt Structure

45 Pages Posted: 23 Oct 2019

See all articles by Paolo Colla

Paolo Colla

Bocconi University - Department of Finance; Bocconi University - BAFFI Center on International Markets, Money, and Regulation

Filippo Ippolito

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences; Barcelona Graduate School of Economics; Centre for Economic Policy Research (CEPR)

Kai Li

University of British Columbia (UBC) - Sauder School of Business; China Academy of Financial Research (CAFR)

Date Written: October 15, 2019

Abstract

We review the literature on debt structure, which is a central element in a firm’s capital structure. We first survey both theoretical and empirical research pertaining to debt characteristics – maturity and priority – and debt types – bank loans, corporate bonds, credit lines, commercial paper, and capital leases. We then present comprehensive empirical evidence on public U.S. firms’ debt structure, highlighting that over three-quarters of U.S. firms concentrate their borrowing in one debt type, and offer some suggestive explanations for the observed pattern. Finally, we discuss directions for future research, including a better understanding of debt structure choices by non-U.S. firms and by private firms, the cross-sectional and temporal variations in debt structure, and the corporate policy implications of firms’ debt structure choices.

Keywords: capital structure; debt structure; debt specialization; maturity; priority; bank loans; corporate bonds; credit lines; commercial paper; capital leases; bankruptcy costs; creditor conflicts; coordination failure; information asymmetry; credit market access

JEL Classification: G32

Suggested Citation

Colla, Paolo and Ippolito, Filippo and Li, Kai, Debt Structure (October 15, 2019). Available at SSRN: https://ssrn.com/abstract=3469712 or http://dx.doi.org/10.2139/ssrn.3469712

Paolo Colla

Bocconi University - Department of Finance ( email )

Via Roentgen 1
Milano, MI 20136
Italy

Bocconi University - BAFFI Center on International Markets, Money, and Regulation ( email )

Milano, 20136
Italy

Filippo Ippolito

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences ( email )

Ramon Trias Fargas 25-27
Barcelona, 08005
Spain
(+34) 93 542 2578 (Phone)
(+34) 93 542 1746 (Fax)

Barcelona Graduate School of Economics ( email )

Ramon Trias Fargas, 25-27
Barcelona, Barcelona 08005
Spain

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Kai Li (Contact Author)

University of British Columbia (UBC) - Sauder School of Business ( email )

2053 Main Mall
Vancouver, BC V6T 1Z2
Canada
604-822-8353 (Phone)
604-822-4695 (Fax)

HOME PAGE: http://finance.sauder.ubc.ca/~kaili

China Academy of Financial Research (CAFR)

1954 Huashan Road
Shanghai P.R.China, 200030
China

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