DP12289 Corporate Debt Maturity Profiles

Author(s): Jaewon Choi, Dirk Hackbarth, Josef Zechner
Publication Date: September 2017
Keyword(s): Capital Structure, Debt Maturity, Debt Structure
JEL(s): G13, G31, G32, G33
Programme Areas: Financial Economics
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=12289

We study a novel aspect of a firm's capital structure, namely the profile of its debt maturity dates. In a simple theoretical framework we show that the dispersion of debt maturities constitutes an important dimension of capital structure choice, driven by firm characteristics and debt rollover risk. Guided by these predictions we establish two main empirical results. First, using an exogenous shock to rollover risk, we document a significant increase in maturity dispersion for firms that need to roll over maturing debt. Second, we find strong support that maturities of newly issued debt are influenced by pre-existing maturity profiles.