Debt management is of high importance for financial professionals and is a complex managerial
decision, since the uncertainty of business cashflows may undermine the availability of
financing, stress business operations and diminish future growth prospects. Whilst the management
of corporate debt has sparked much interest and been widely discussed in the academic
literature, none of the existing theories address this problem comprehensively.
This thesis considers debt management decisions in non- financial corporations; it tests empirically
various existing theories, establishes several stylised facts regarding funding decisions
and contributes to the current research by exploring the influence of industry specific factors,
financial intermediates and market conditions on debt management. Using U.S. data at the
company level, the first study explores the variation of debt maturity across industry. Also,
using both European bond and loan aggregate data, the second and third studies are the first
ones, which highlight the impact of financial intermediates on both debt issuance and debt
maturity timing strategies. The present work therefore offers both a cross-sectional overview
of debt management and an analysis of its dynamics over time.
The results indicate that (i) in addition to firm's characteristics, the cross-sectional variation
of debt maturity can be explained by industry specific factors, which are not captured in
the existing literature, (ii) that the agency cost hypothesis appears to be irrelevant for large
cap firms, therefore giving more weight to the maturity-matching principle and the signaling
hypothesis in explaining debt maturity structure, (iii) that managers tend to time their credit
borrowing spread when they issue bonds and switch to the loan market during high interest
rate periods, therefore contradicting earlier claims that interest rate timing explains time-series
variations of debt issuance and (iv) that while corporates debt maturity mirror government
debt maturity when directly placed debt is considered, financial intermediates act as a barrier
to corporate debt maturity timing strategy
