Asset life, leverage, and debt maturity matching

• 成果类型: Article
• 署名作者: Geelen, Thomas; Hajda, Jakub; Morellec, Erwan; Winegar, Adam
• 署名单位: Copenhagen Business School; Danish Finance Institute; Universite de Montreal; HEC Montreal; Swiss Finance Institute (SFI); Swiss Federal Institutes of Technology Domain; Ecole Polytechnique Federale de Lausanne; Centre for Economic Policy Research - UK; BI Norwegian Business School
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2024.103796
• 发表日期: 2024
• 关键词: Capital age; Asset life; Maturity matching; Debt cycles; Maturity cycles

摘要

Capital ages and must eventually be replaced. We propose a theory of financing in which firms borrow to finance investment and deleverage as capital ages to have enough financial slack to finance replacement investments. To achieve these dynamics, firms issue debt with a maturity that matches the useful life of assets and a repayment schedule that reflects the need to free up debt capacity as capital ages. In the model, leverage and debt maturity are negatively related to capital age while debt maturity and the length of debt cycles are positively related to asset life. We provide empirical evidence that strongly supports these predictions.