Short-Term Debt Catering

37 Pages Posted: 24 Jan 2021

See all articles by Stefano Lugo

Stefano Lugo

Utrecht University - School of Economics

Date Written: December 2, 2020


Focusing on investments by US money market mutual funds (MMFs) in nonfinancial commercial paper, this study shows that the demand for corporate short-term securities by preferred-habitat investors is positively associated with the use of short-term debt by firms. Consistent results are found when using a longitudinal dataset with a monthly frequency and a firm-quarter panel dataset; instrumenting the demand by MMFs; measuring the demand by MMFs at the level of individual issuers; and exploiting an exogenous change in regulation for identification. These findings support the idea that corporations cater to investors' preferences in choosing their debt maturity structure.

Keywords: Debt Maturity, Catering to Investors, Clientele Effects, Money Market Mutual Funds, Commercial Paper

JEL Classification: G23, G30, G32

Suggested Citation

Lugo, Stefano, Short-Term Debt Catering (December 2, 2020). Journal of Corporate Finance, Forthcoming, Available at SSRN:

Stefano Lugo (Contact Author)

Utrecht University - School of Economics ( email )

Kriekenpitplein 21-22
Adam Smith Building
Utrecht, +31 30 253 7373 3584 EC

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