The Long-Term Use of Short-Term Debt Around the World
We study the phenomenon of firms’ using short-term debt to fund long-term investments (SDLI). Using a sample of firms from 45 countries in the 1990–2015 period, we develop three novel proxies for firms’ SDLI. The reasonableness of our SDLI proxies has been confirmed by a survey and several cross-validation investigations. Next, we demonstrate that both market timing and collateral constraints are key determinants of SDLI. Finally, we find that SDLI impairs both corporate future operational performance and stock return performance. The decline in firm value is mainly attributed to the SDLI-induced inefficient over-investment
Year of publication: |
2023
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Authors: | Chen, Lifang ; Li, Yong ; Wang, Yizhong ; Zhang, Bohui |
Publisher: |
[S.l.] : SSRN |
Saved in:
freely available
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