Abstract
We examine the drivers of the choice among non-bank private (144A) debt, bank loans, and public debt made by 988 non-financial firms during 1993-2007. We document new evidence that, besides firm-level variables, macroeconomic factors are important determinants of changes in corporate debt mix. Our findings highlight the importance of macroeconomic variables on firms’ borrowing decisions as predicted by Diamond (1991). Most importantly, we find that the majority of the drivers of changes in corporate debt mix vary over time and across economic conditions, which would address the concern of Denis and Mihov (2003) about their sample’s inability to examine the pattern of debt mix over time. We also find strong evidence that private debt and public debt are substitutes as widely hypothesized, which is inconsistent with Rauh and Sufi (2010).
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.