This study revisits the relation between firms' choices of debt maturity and their investment in a dynamic world. Prior … optimal maturity by balancing these opposing forces. For the firm with average investment and financing, the agency cost … firms' flexibility in choosing maturity. I also measure firm-specific agency costs using likelihood-based structural …

We show that firms’ debt maturity structure plays an important role in investment above and beyond that of leverage …. Firms with a longer debt maturity structure tend to invest more. These results are stronger for firms with high leverage …, profitability, and growth potential. We rationalize our results in a model in which debt maturity structure is determined by the …

prior to issuing additional debt. For realistic values of issuance costs and debt maturity, the no-commitment policy …