Short-Term Debt as Bridge Financing: Evidence from the Commercial Paper Market
type="main"> <title type="main">ABSTRACT</title> <p>We analyze why firms use nonintermediated short-term debt by studying the commercial paper (CP) market. Using a comprehensive database of CP issuers and issuance activity, we show that firms use CP to provide start-up financing for capital investment. Firms’ CP issuance is driven by a desire to minimize transaction costs associated with raising capital for new investment. We show that firms with high rollover risk are less likely to enter the CP market, borrow less CP, and borrow more from bank credit lines. Further, CP is often refinanced with long-term bond issuance to reduce rollover risk.
Year of publication: |
2015
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Authors: | KAHL, MATTHIAS ; SHIVDASANI, ANIL ; WANG, YIHUI |
Published in: |
Journal of Finance. - American Finance Association - AFA, ISSN 1540-6261. - Vol. 70.2015, 1, p. 211-255
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Publisher: |
American Finance Association - AFA |
Saved in:
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