Guedes is from Universidade Catolica Portuguesa. Opler is from Ohio State University. We thank an anonymous referee, Sugato Bhattacharya, Bob Connolly, Vidhan Goyal, Jean Helwege, David Hirshleifer, Simon Kwan, Ken Lehn, Craig Lewis, David Mauer, David Mayers, Richard McEnally, Bernadette Minton, Karlyn Mitchell, Harold Mulherin, Krishna Palepu, John Persons, Lee Pinkowitz, Avri Ravid, Richard Ruback, Paul Schultz, René Stulz, Sheridan Titman, Peter Tufano, Rex Thompson, Ralph Walkling, Karen Wruck, Marc Zenner, and seminar participants at the 1995 American Finance Association (AFA) Meetings, the 1994 Financial Management Association (FMA) Meetings, Harvard Business School, the University of Michigan, the University of North Carolina, Ohio State University, and the University of Pittsburgh for helpful comments. Conversations with Roberts W. Brokaw III and Leland Crabbe of Merrill Lynch, Bob Cavanaugh of JC Penney, Peter Klosowicz of Deutsche Morgan Grenfell, and Gregg Koser of Electronic Data Systems (EDS) were of great help in writing this article. The second author benefitted from research support from the Charles A. Dice Center for Financial Economics at Ohio State University.
The Determinants of the Maturity of Corporate Debt Issues
Article first published online: 30 APR 2012
1996 The American Finance Association
The Journal of Finance
Volume 51, Issue 5, pages 1809–1833, December 1996
How to Cite
GUEDES, J. and OPLER, T. (1996), The Determinants of the Maturity of Corporate Debt Issues. The Journal of Finance, 51: 1809–1833. doi: 10.1111/j.1540-6261.1996.tb05227.x
- Issue published online: 30 APR 2012
- Article first published online: 30 APR 2012
We document the determinants of the term to maturity of 7,369 bonds and notes issued between 1982 and 1993. Our main finding is that large firms with investment grade credit ratings typically borrow at the short end and at the long end and of the maturity spectrum, while firms with speculative grade credit ratings typically borrow in the middle of the maturity spectrum. This pattern is consistent with the theory that risky firms do not issue short-term debt in order to avoid inefficient liquidation, but are screened out of the long-term debt market because of the prospect of risky asset substitution.