Disclosing the Undisclosed: Commercial Paper as Hidden Liquidity Buffer

65 Pages Posted: 10 Mar 2022

See all articles by Sven Klingler

Sven Klingler

BI Norwegian Business School

Olav Syrstad

Norges Bank

Multiple version iconThere are 2 versions of this paper

Date Written: April 9, 2021


Using new transaction-level data for non-financial commercial paper (CP) in the U.S., we show that companies systematically reduce their outstanding short-term debt on quarterly and annual disclosure dates. Constraints on CP lending supply cannot explain this pattern. Instead, companies optimize their disclosed liquidity buffers and strategically repay CP debt if doing so strengthens common accounting ratios, such as the current ratio. Unlike other CP issuers, firms that repay their CP debt neither hold lower cash buffers nor use CP as bridge financing, suggesting an alternative role of CP debt as "hidden liquidity buffer".

Keywords: Commercial paper, balance sheet management, disclosure, cash management, window dressing

JEL Classification: G32, G23, G14

Suggested Citation

Klingler, Sven and Syrstad, Olav, Disclosing the Undisclosed: Commercial Paper as Hidden Liquidity Buffer (April 9, 2021). Available at SSRN: https://ssrn.com/abstract=3824651 or http://dx.doi.org/10.2139/ssrn.3824651

Sven Klingler (Contact Author)

BI Norwegian Business School ( email )

Nydalsveien 37
Oslo, 0442

Olav Syrstad

Norges Bank ( email )

P.O. Box 1179
Oslo, N-0107

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