Debt financing in private and public firms

Kim Huynh, Teodora Paligorova () and Robert Petrunia
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Teodora Paligorova: Federal Reserve Board

Annals of Finance, 2018, vol. 14, issue 4, No 2, 465-487

Abstract: Abstract Using administrative confidential data on the universe of Canadian corporate firms, we compare debt financing choices of private and public firms. Private firms have higher leverage ratios, which are entirely driven by private firms’ stronger reliance on short-term debt. Further, private firms rely more of leverage during economic expansions, while public firms rely on equity financing. Specifically, private firms manage to increase their long-term debt during expansions, while short-term debt is used during downturns. Our findings have implications for a better understanding of the role of asymmetric information in private firms’ capital structure decisions.

Keywords: Capital structure; Private firms; Leverage (search for similar items in EconPapers)
JEL-codes: G30 L11 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (6)

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DOI: 10.1007/s10436-018-0323-6

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