Abstract
Short‐term corporate debt as a proportion of total debt issued by public firms varies greatly across countries, between 28% in the United States and 78% in China. This paper argues that the interaction between information asymmetry and legal protection of creditors is an important determinant of debt maturity. When short‐term debt plays a dual role as signaling and commitment devices, a reduction in information asymmetry has a larger impact on debt maturity when creditor rights are weaker. We find empirical support for this prediction using firm‐level data from 45 countries around the world.
| Original language | English |
|---|---|
| Pages (from-to) | 997-1029 |
| Number of pages | 33 |
| Journal | Journal of Money Credit and Banking |
| Volume | 49 |
| Issue number | 5 |
| Early online date | 24 Jul 2017 |
| DOIs | |
| Publication status | Published - Aug 2017 |
Bibliographical note
©2017 The Ohio State University. This is an author-produced version of the published paper. Uploaded in accordance with the publisher’s self-archiving policy. Further copying may not be permitted; contact the publisher for details.Keywords
- debt maturity
- information sharing
- creditor protection
- law and finance
