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Short‐Term Corporate Debt around the World

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JournalJournal of Money Credit and Banking
DateAccepted/In press - 11 Aug 2016
DateE-pub ahead of print - 24 Jul 2017
DatePublished (current) - Aug 2017
Issue number5
Volume49
Number of pages33
Pages (from-to)997-1029
Early online date24/07/17
Original languageEnglish

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.

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©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.

    Research areas

  • debt maturity, information sharing, creditor protection, law and finance

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