Publications in Scientific Journals:
T. Dangl, J. Zechner:
"Debt Maturity and the Dynamics of Leverage";
Review of Financial Studies,
34
(2021),
12;
5796
- 5840.
English abstract:
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 modelīs predictions.
Keywords:
Corporate finance, capital structure choice
"Official" electronic version of the publication (accessed through its Digital Object Identifier - DOI)
http://dx.doi.org/10.1093/rfs/hhaa148
Electronic version of the publication:
https://publik.tuwien.ac.at/files/publik_302576.pdf
Created from the Publication Database of the Vienna University of Technology.