Journal of Financial and Quantitative Analysis Vol. 49 No. 4 2014
Debt Maturity Structure and Credit Quality
Abstract
We examine whether a firm’s debt maturity structure affects its credit quality. Consistent with theory, we find that firms with greater exposure to rollover risk (measured by the amount of long-term debt payable within a year relative to assets) have lower credit quality; long-term bonds issued by those firms trade at higher yield spreads, indicating that bond market investors are cognizant of rollover risk arising from a firm’s debt maturity structure. These effects are stronger among firms with a speculative-grade rating and declining profitability, and during recessions.
- DOI
- 10.1017/s0022109014000520
- Volume
- 49
- Issue
- 4
- Pages
- 817-842
- Language
- en
- Sources
- bibtex:phds-export.bib crossref openalex