IDEAS home Printed from https://ideas.repec.org/a/cup/jfinqa/v11y1976i03p339-357_02.html
   My bibliography  Save this article

A Model for Corporate Debt Maturity Decisions

Author

Listed:
  • Morris, James R.

Abstract

Whenever the firm must borrow funds, it must also decide maturity of the new debt. Yet, the decision models which have dealt with the debt maturity decision have done so almost incidentally, as an extension of the decision to exercise the call provision on outstanding bonds ([6], [10], [23]). There has been little direct examination of the corporate debt maturity decision. In an attempt to fill this gap, this paper is an exploration of the debt maturity decision for a firm which is concerned with minimizing the present value of the expected costs of borrowing. This paper develops a discrete dynamic programming model of the debt maturity decision, in a world where interest rates follow a finite Markov process, and where the yield curve is formed from expectations regarding the future course of interest rates. With this optimization model, the influence on the debt maturity strategy of variables such as flotation costs and liquidity premiums will be explored. There will be no consideration of the risks associated with alternative borrowing strategies.

Suggested Citation

  • Morris, James R., 1976. "A Model for Corporate Debt Maturity Decisions," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 11(3), pages 339-357, September.
    • Handle: RePEc:cup:jfinqa:v:11:y:1976:i:03:p:339-357_02
    as

    Download full text from publisher

    File URL: https://www.cambridge.org/core/product/identifier/S0022109000020706/type/journal_article
    File Function: link to article abstract page
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. James R. Morris, 1982. "Taxes, Bankruptcy Costs And The Existence Of An Optimal Capital Structure," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 5(3), pages 285-299, September.
    2. Yao Maurice & Yves Mard & Éric Séverin, 2015. "Maturité De La Dette Et Gouvernance D'Entreprise," Post-Print hal-01188805, HAL.
    3. Warinthip Worasak & Nuwat Nookhwun & Pongpitch Amatyakul, 2022. "Monetary Policy and Risk-Taking: Evidence from Thai Corporate Bond Markets," PIER Discussion Papers 186, Puey Ungphakorn Institute for Economic Research.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cup:jfinqa:v:11:y:1976:i:03:p:339-357_02. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Kirk Stebbing (email available below). General contact details of provider: https://www.cambridge.org/jfq .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.