This study shows that the maturity structure of a firm’s debt has a significant impact on its investment decisions. We show, after controlling for the effect of the overall level of leverage, that a higher percentage of long-term debt in total debt significantly reduces investment for firms with high growth opportunities. In contrast, the correlation between debt maturity and investment is not significant for firms with low growth opportunities. The results are strong at the firm level and at the business segment level. These results hold even after controlling for the endogeneity problem inherent in the relationship between total leverage, the maturity composition of leverage, and investment.
More articles in Financial Management from Financial Management Association Address: University of South Florida 4202 E. Fowler Ave. COBA #3331 Tampa, FL 33620 Contact information at EDIRC. Series data maintained by Courtney Connors (). This e-mail address is bad, please contact .