Short-term debt catering

Stefano Lugo

doi:10.1016/j.jcorpfin.2020.101817

Short-term debt catering

Stefano Lugo^*

^*Corresponding author for this work

Research output: Contribution to journal › Article › Academic › peer-review

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Abstract

Focusing on investments by US money market mutual funds (MMFs) in nonfinancial commercial paper, this study shows that the demand for corporate short-term securities by preferred-habitat investors is positively associated with the use of short-term debt by firms. Consistent results are found when using a longitudinal dataset with a monthly frequency and a firm-quarter panel dataset; instrumenting the demand by MMFs; measuring the demand by MMFs at the level of individual issuers; and exploiting an exogenous change in regulation for identification. These findings support the idea that corporations cater to investors' preferences in choosing their debt maturity structure.

Original language	English
Article number	101817
Number of pages	12
Journal	Journal of Corporate Finance
Volume	66
DOIs	https://doi.org/10.1016/j.jcorpfin.2020.101817
Publication status	Published - Feb 2021

Keywords

Catering to investors
Clientele effects
Commercial paper
Debt maturity
Money market mutual funds

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10.1016/j.jcorpfin.2020.101817Licence: CC BY

1-s2.0-S0929119920302613-mainFinal published version, 654 KBLicence: CC BY

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Short-term debt catering

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Keywords

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