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Corporate Debt Issuance and the Historical Level of Interest Rates

Author

Listed:
  • Christopher B. Barry
  • Steven C. Mann
  • Vassil T. Mihov
  • Mauricio Rodríguez

Abstract

"Using a sample that comprises more than 14,000 new issues of corporate debt for the period 1970-2001, we examine the relation between debt issues and the level of interest rates relative to historical levels. Consistent with recent survey evidence, we find that companies issue more debt, more debt relative to investment spending, and more debt compared to equity when interest rates are low relative to historical rates. The effects continue to hold when we control for other variables that influence debt issuance and when we account for refinancing." Copyright (c) 2008 Financial Management Association International..

Suggested Citation

  • Christopher B. Barry & Steven C. Mann & Vassil T. Mihov & Mauricio Rodríguez, 2008. "Corporate Debt Issuance and the Historical Level of Interest Rates," Financial Management, Financial Management Association International, vol. 37(3), pages 413-430, September.
  • Handle: RePEc:bla:finmgt:v:37:y:2008:i:3:p:413-430
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    Citations

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    Cited by:

    1. Ellis Kofi, Akwaa-Sekyi & Portia, Bosompra, 2015. "Determinants of business loan default in Ghana," MPRA Paper 71961, University Library of Munich, Germany.
    2. repec:fau:fauart:v:67:y:2017:i:2:p:80-103 is not listed on IDEAS
    3. Butler, Alexander W. & Cornaggia, Jess & Grullon, Gustavo & Weston, James P., 2011. "Corporate financing decisions, managerial market timing, and real investment," Journal of Financial Economics, Elsevier, vol. 101(3), pages 666-683, September.
    4. Halil D. Kaya, 2011. "Syndicated bank loans and capital structure," Managerial Finance, Emerald Group Publishing, vol. 37(8), pages 697-714, July.
    5. Owen Nyang'oro, 2016. "Determinants of Capital Structure of Listed Firms in Kenya and the Impact of Corporate Tax," Research Papers RP_329, African Economic Research Consortium.
    6. repec:bla:acctfi:v:56:y:2016:i:4:p:1149-1185 is not listed on IDEAS
    7. Miguel Acedo-Ramírez & Juan Ayala-Calvo & José Rodríguez-Osés, 2013. "Capital structure of small companies in the Spanish footwear sector: relevant factors," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 4(2), pages 155-173, June.
    8. Lim, Steve C. & Mann, Steven C. & Mihov, Vassil T., 2017. "Do operating leases expand credit capacity? Evidence from borrowing costs and credit ratings," Journal of Corporate Finance, Elsevier, vol. 42(C), pages 100-114.
    9. Paredes-Gómez, Angélica & Flores-Ortega, Miguel, 2012. "Análisis del comportamiento de la estructura de capital de empresas mexicanas del sector 7 siderúrgico en el periodo 2001-2011," eseconomía, Escuela Superior de Economía, Instituto Politécnico Nacional, vol. 0(36), pages 45-72, cuarto tr.
    10. Murray Z. Frank & Vidhan K. Goyal, 2009. "Capital Structure Decisions: Which Factors Are Reliably Important?," Financial Management, Financial Management Association International, vol. 38(1), pages 1-37, March.
    11. Barry, Christopher B. & Mann, Steven C. & Mihov, Vassil & Rodríguez, Mauricio, 2009. "Interest rate changes and the timing of debt issues," Journal of Banking & Finance, Elsevier, vol. 33(4), pages 600-608, April.
    12. Muradoğlu, Yaz Gülnur & Onay, Ceylan & Phylaktis, Kate, 2014. "European integration and corporate financing," International Review of Financial Analysis, Elsevier, vol. 33(C), pages 138-157.
    13. Sakshi Khanna & Amit Srivastava & Yajulu Medury, 2015. "The Effect of Macroeconomic Variables on the Capital Structure Decisions of Indian Firms: A Vector Error Correction Model/Vector Autoregressive Approach," International Journal of Economics and Financial Issues, Econjournals, vol. 5(4), pages 968-978.
    14. repec:cbu:jrnlec:y:2017:v:3:p:36-43 is not listed on IDEAS
    15. repec:eee:jebusi:v:92:y:2017:i:c:p:10-28 is not listed on IDEAS
    16. Snehal S Herwadkar, 2017. "Corporate leverage in EMEs: did the global financial crisis change the determinants?," BIS Working Papers 681, Bank for International Settlements.

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