Debt Maturity and Firm Productivity—The Role of Intangibles

Ryota Nakatani

MPRA Paper from University Library of Munich, Germany

Abstract: Does the maturity of debt matter for productivity? Using data on Italian firms from 1997 to 2015, we study the relationship among debt maturity, productivity, and firm characteristics. We find that productivity is positively associated with short-term debt and negatively associated with long-term debt. This result supports the hypothesis that the less intense monitoring of firm performance and fewer liquidation fears stemming from the long maturity of debt causes a moral hazard, while short-term debt serves as a disciplinary device to improve firm performance in the short run. This effect is evident in small- and medium-sized enterprises and old firms. In contrast, large firms can utilize long-term financing to improve productivity through long-term investments. Firms improve productivity by purchasing intangible assets financed by short-term debt.

Keywords: Debt maturity; Productivity; SMEs; Firm size; Firm age; Intangibles (search for similar items in EconPapers)
JEL-codes: D22 D24 G32 O16 O34 (search for similar items in EconPapers)
Date: 2023-01-28
New Economics Papers: this item is included in nep-bec, nep-cfn, nep-cta, nep-eff, nep-ent, nep-fdg and nep-sbm
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Citations: View citations in EconPapers (7)

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Journal Article: Debt maturity and firm productivity—The role of intangibles (2023)
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