Short‐Term Corporate Debt around the World

Marco Sorge, Chendi Zhang and Kostas Koufopoulos

Journal of Money, Credit and Banking, 2017, vol. 49, issue 5, 997-1029

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.

Date: 2017
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https://doi.org/10.1111/jmcb.12403

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Persistent link: https://EconPapers.repec.org/RePEc:wly:jmoncb:v:49:y:2017:i:5:p:997-1029

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