The effects of corporate bond granularity

Lars Norden, Peter Roosenboom and Teng Wang

Journal of Banking & Finance, 2016, vol. 63, issue C, 25-34

Abstract: We investigate whether and how firms manage their rollover risk by having a dispersed bond maturity structure (granularity). Granularity can be achieved or maintained by frequently issuing sets of bonds with different maturities. We find that firms with higher granularity have higher availability of financing, lower cost of financing, lower financial constraints and lower stock return volatility. The effects are stronger for firms that face higher rollover risk. The evidence suggests that spreading out bond maturities is an effective corporate policy to manage rollover risk.

Keywords: Debt finance; Bond maturity; Rollover risk; Issue frequency; Cost of capital (search for similar items in EconPapers)
JEL-codes: G10 G31 G32 G33 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:63:y:2016:i:c:p:25-34

DOI: 10.1016/j.jbankfin.2015.11.001

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