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Granularity of Corporate Debt

Published online by Cambridge University Press:  02 September 2020

Jaewon Choi*
University of Illinois Urbana-Champaign and Yonsei
Dirk Hackbarth
Boston University Questrom School of Business, CEPR, and
Josef Zechner
Vienna University of Economics and
* (corresponding author)


We study whether firms spread out debt-maturity dates, which we call granularity of corporate debt. In our model, firms that are unable to roll over expiring debt need to liquidate assets. If multiple small asset sales are less inefficient than a single large one, it can be optimal to diversify debt rollovers across time. Using a large sample of corporate bond issuers during the 1991–2012 period, we establish novel stylized facts and evidence consistent with our model’s predictions. There is substantial heterogeneity (i.e., firms have both concentrated and dispersed debt structures). Debt maturities are more dispersed for larger and more mature firms and for firms with better investment opportunities, higher leverage, and lower profitability. During the recent financial crisis, firms with valuable investment opportunities implemented more dispersed maturity structures. Finally, firms manage granularity actively and adjust toward target levels.

Research Article

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We are grateful to Viral Acharya, Heitor Almeida, Ran Duchin, Chuan Yang Hwang, Evgeny Lyandres, Ernst Maug, Sheriden Titman, and John Wald and seminar participants at the Catolica Lisbon joint seminar with Nova and Instituto Universitário de Lisboa (ISCTE-IUL), Copenhagen Business School, Ecole des Hautes Etudes Commerciales du Nord (EDHEC) Nice, European School of Management and Technology (ESMT) Berlin, Erasmus University Rotterdam, Hebrew University, Interdisciplinary Center (IDC) Herzliya, Maastricht University, Tel Aviv University, the University of California at San Diego, the University of Geneva, the University of Hong Kong, the University of Illinois, the University of Iowa, the University of Mannheim, the University of Oxford, the University of Pennsylvania, the University of St. Gallen, the University of Tilburg, the University of Washington, Vienna University of Economics and Business, WHU-Otto Beisheim School of Management, the 2012 China International Conference, the 2012 European Finance Association (EFA) Meetings, and the 2012 Liquidity Risk Management Conference for helpful comments and suggestions.


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