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Industry Structure and Corporate Debt Maturity


  • Otgontsetseg Erhemjamts
  • Kartik Raman
  • Husayn Shahrur


We examine how industry competition affects firms' choice of short-term debt. We find that the percentage of short-term debt is positively related to industry concentration at low levels of concentration, and inversely related to industry concentration at higher levels of concentration. This nonlinear relation is stronger in industries where firms are either more homogeneous or compete more aggressively. Moreover, we find that firms with shorter-maturity debt are less aggressive than their rivals in the product market. The overall evidence suggests that although financial contracts alleviate agency problems, they exacerbate the risk of predation. Copyright (c) 2010, The Eastern Finance Association.

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  • Otgontsetseg Erhemjamts & Kartik Raman & Husayn Shahrur, 2010. "Industry Structure and Corporate Debt Maturity," The Financial Review, Eastern Finance Association, vol. 45(3), pages 627-657, August.
  • Handle: RePEc:bla:finrev:v:45:y:2010:i:3:p:627-657

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    Cited by:

    1. Anagnostopoulou, Seraina C. & Drakos, Konstantinos, 2016. "Bank loan terms and conditions: Is there a macro effect?," Research in International Business and Finance, Elsevier, vol. 37(C), pages 269-282.

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