Debt Structure, Rollover Risk, and Payout Policy

42 Pages Posted: 27 Nov 2020

See all articles by Hiromichi Iwaki

Hiromichi Iwaki

Daito Bunka University, Department of Modern Economics

Junyu Saito

MomoyamaGakuin University

Date Written: October 1, 2020

Abstract

This paper examines the effects of the rollover risk of debt on firms’ payout policies, taking into account differences in the structure of debt. The results show that in the face of rollover risk, firms decrease dividends; in addition, they decrease the total payout given to shareholders including stock repurchases. However, these results only hold for the bank-dependent firms, not for firms with public debt. We find that the relationships between rollover risk and payout policy become weak for firms without any financing constraints. Our results imply that firms’ payout policies can be attenuated when firms facing financial constraints need more financial flexibility.

Keywords: debt structures, rollover risk, payout policy, financing constraints

JEL Classification: G31; G35

Suggested Citation

Iwaki, Hiromichi and Saito, Junyu, Debt Structure, Rollover Risk, and Payout Policy (October 1, 2020). Available at SSRN: https://ssrn.com/abstract=3709652 or http://dx.doi.org/10.2139/ssrn.3709652

Hiromichi Iwaki

Daito Bunka University, Department of Modern Economics ( email )

1-9-1, Takashimadaira
Itabashi-ku, Tokyo 175-8571
Japan

HOME PAGE: http://https://hiromichiiwaki.wixsite.com/personal

Junyu Saito (Contact Author)

MomoyamaGakuin University ( email )

1-1 Manabino
Izumi, Osaka 594-1198
Japan
+81-725-54-3131 (Phone)

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