The Debt Maturity Choice: An Empirical Investigation
AbstractIn this paper I develop and test three nonmutually exclusive hypotheses about the determinants of corporations' debt maturity choices using a sample of corporate bonds issued between 1982 and 1986. The empirical evidence strongly supports the hypothesis that firms use bond maturity to facilitate monitoring by outsiders (the monitoring hypothesis) and weakly supports the hypothesis that firms with high-quality projects use bond maturity to signal project quality (the signaling hypothesis). The evidence does not support the hypothesis that firms use bond maturity to achieve an optimal trade-off between interest tax shields and bankruptcy costs (the tax/bankruptcy cost hypothesis).
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Bibliographic InfoArticle provided by Southern Finance Association & Southwestern Finance Association in its journal Journal of Financial Research.
Volume (Year): 16 (1993)
Issue (Month): 4 (Winter)
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- Allen N. Berger & Marco A. Espinosa-Vega & W. Scott Frame & Nathan H. Miller, 2004.
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- Fu, Richard & Subramanian, Ajay, 2011. "Leverage and debt maturity choices by undiversified owner-managers," Journal of Corporate Finance, Elsevier, vol. 17(4), pages 888-913, September.
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