The Substitution Effects of Short-term Debt for Long-term Debt on the Expected Returns of Common Stocks  

Oleh:

Choe, Yong Shik

Jenis: Article from Journal - ilmiah internasional
Dalam koleksi: Asia Pacific Journal of Management vol. 11 no. 2 (Okt. 1994), page 187-203.
Fulltext: Yong Shik Choe.pdf (41.63KB)

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Perpustakaan Pusat (Semanggi) Nomor Panggil: AA66 Non-tandon: 1 (dapat dipinjam: 0) Tandon: tidak ada

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Isi artikel

The determination of the level of corporate borrowing and the choice of debt maturity are the 2 most important concerns in the management of capital structure. An analysis examines analytically and empirically the impact of debt maturity changes on the expected returns of common stocks. Using US stock market data and financial statement data, the analysis examines the cross-sectional relation between expected returns and financial leverage ratios. The analysis finds reliable evidence that common stock expected returns are positively related to the extent of short-term debt financing. The positive relation is significant even after the analysis controls for systematic risk, total debt ratio, and firm size. The results suggest that an increase in short-term debt that displaces the same amount of long-term debt increases the expected returns of common stocks, possibly because the substitution transfers risk from long-term debt holders to shareholders.

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