Debt Maturity and the Dynamics of Leverage

• 成果类型: Article
• 署名作者: Dangl, Thomas; Zechner, Josef
• 署名单位: Technische Universitat Wien; Vienna University of Economics & Business
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhaa148
• 发表日期: 2021
• 页码: 5796
• 关键词: capital structure; Rollover risk; bankruptcy; liquidity; COSTS; determinants; priority; default

摘要

This paper shows that short debt maturities commit equityholders to leverage reductions when refinancing expiring debt in low-profitability states. However, shorter maturities lead to higher transaction costs since larger amounts of expiring debt need to be refinanced. We show that this trade-off between higher expected transaction costs against the commitment to reduce leverage in low-profitability states motivates an optimal maturity structure of corporate debt. Since firms with high costs of financial distress and risky cash flows benefit most from committing to leverage reductions, they have a stronger motive to issue short-term debt. Evidence supports the model's predictions.