The determinants of the maturity of corporate debt issues

José Guedes, Tim Opler

Research output: Contribution to journalArticlepeer-review

369 Citations (Scopus)

Abstract

We document the determinants of the term to maturity of 7,369 bonds and notes issued between 1982 and 1993. Our main finding is that large firms with investment grade credit ratings typically borrow at the short end and at the long end and of the maturity spectrum, while firms with speculative grade credit ratings typically borrow in the middle of the maturity spectrum. This pattern is consistent with the theory that risky firms do not issue short-term debt in order to avoid inefficient liquidation, but are screened out of the long-term debt market because of the prospect of risky asset substitution.

Original languageEnglish
Pages (from-to)1809-1833
Number of pages25
JournalJournal of Finance
Volume51
Issue number5
DOIs
Publication statusPublished - Dec 1996

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