Short-Term Debt as Bridge Financing: Evidence from the Commercial Paper Market

Matthias Kahl, Anil Shivdasani and Yihui Wang

Journal of Finance, 2015, vol. 70, issue 1, 211-255

Abstract: type="main">

We analyze why firms use nonintermediated short-term debt by studying the commercial paper (CP) market. Using a comprehensive database of CP issuers and issuance activity, we show that firms use CP to provide start-up financing for capital investment. Firms’ CP issuance is driven by a desire to minimize transaction costs associated with raising capital for new investment. We show that firms with high rollover risk are less likely to enter the CP market, borrow less CP, and borrow more from bank credit lines. Further, CP is often refinanced with long-term bond issuance to reduce rollover risk.

Date: 2015
References: Add references at CitEc
Citations: View citations in EconPapers (40)

Downloads: (external link)
http://hdl.handle.net/10.1111/jofi.12216 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:jfinan:v:70:y:2015:i:1:p:211-255

Ordering information: This journal article can be ordered from
http://www.afajof.org/membership/join.asp

Access Statistics for this article

More articles in Journal of Finance from American Finance Association Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().