Why are U.S. Firms Using More Short-Term Debt?

51 Pages Posted: 8 May 2011

See all articles by Miguel A. Ferreira

Miguel A. Ferreira

New University of Lisbon - Nova School of Business and Economics

Luis Laureano

ISCTE - Lisbon University Institute - School of Business

Claudia Custodio

Imperial College London; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)

Multiple version iconThere are 3 versions of this paper

Date Written: March 1, 2010

Abstract

We document a secular decrease in corporate debt maturity of US firms from 1976 to 2008. This decrease in debt maturity is driven by the smallest firms for which the average percentage of debt maturing in more than three years decreases from 49% in 1976 to 28% in 2008. For large firms, however, the decrease in average debt maturity is small. Firms with higher degree of information asymmetry play an important role in explaining the decrease in debt maturity. Agency costs of debt or agency problems between managers and shareholders do not seem to contribute to the decrease. Our results challenge the existing theories as changes in known determinants of debt maturity cannot account for most of the decrease in the use of long-term debt.

Keywords: Capital structure, Debt maturity, Information asymmetry, Agency costs

JEL Classification: G30, G32

Suggested Citation

Ferreira, Miguel A. and Laureano, Luís and Custodio, Claudia, Why are U.S. Firms Using More Short-Term Debt? (March 1, 2010). International Conference of the French Finance Association (AFFI), May 2011, Available at SSRN: https://ssrn.com/abstract=1834343

Miguel A. Ferreira (Contact Author)

New University of Lisbon - Nova School of Business and Economics ( email )

Luís Laureano

ISCTE - Lisbon University Institute - School of Business ( email )

Avenida das Forças Armadas
Lisboa, 1600-189
Portugal

Claudia Custodio

Imperial College London ( email )

South Kensington Campus
Exhibition Road
London, Greater London SW7 2AZ
United Kingdom

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

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