Cyclical Demand and the Choice of Debt Maturity
AbstractThis study provides a model in which a supplier's use of short- and long-term debt depends on the demand for its product. The model predicts that suppliers use short-term debt to match their assets' and liabilities' maturities and that their incentive to do so is stronger, the larger the term premium. The model also predicts that the use of short-term debt increases the amplitudes of the supplier's investment, production, and sales cycles. These changes occur because the use of short-term debt permits suppliers to match production and sales more closely to the pattern of demand for the final good. Copyright 2001 by University of Chicago Press.
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Bibliographic InfoArticle provided by University of Chicago Press in its journal Journal of Business.
Volume (Year): 74 (2001)
Issue (Month): 4 (October)
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- Stephan, Andreas & Talavera, Oleksandr & Tsapin, Andriy, 2010.
"Corporate Debt Maturity Choice in Emerging Financial Markets,"
JIBS Working Papers
2010-2, Jönköping International Business School.
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- Andreas Stephan & Oleksandr Talavera & Andriy Tsapin, 2010. "Corporate Debt Maturity Choice in Emerging Financial Markets," University of East Anglia Applied and Financial Economics Working Paper Series 010, School of Economics, University of East Anglia, Norwich, UK..
- Stephan, Andreas & Talavera, Oleksandr & Tsapin, Andriy, 2008.
"Corporate Debt Maturity Choice in Transition Financial Markets,"
Working Paper Series in Economics and Institutions of Innovation
125, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
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- Chang Nam & Doina Radulescu, 2010. "Effects of corporate tax reform on optimum debt maturity," Annals of Finance, Springer, vol. 6(3), pages 369-389, July.
- Segarra Blasco, Agustí, 1958- & Teruel, Mercedes, 2010. "Are small firms more sensitive to financial variables?," Working Papers 2072/151623, Universitat Rovira i Virgili, Department of Economics.
- Chang Woon Nam & Doina Maria Radulescu, 2004. "Does Debt Maturity Matter for Investment Decisions?," CESifo Working Paper Series 1124, CESifo Group Munich.
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