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With Good Reputation Size Does not Matter: Issue Frequency and the Determinants of Debt Maturity

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  • Rokkanen, Nikolas

    (Swedish School of Economics and Business Administration)

Abstract

This paper examines empirically the effect firm reputation has on the determinants of debt maturity. Utilising data from European primary bond market between 1999 and 2005, I find that the maturity choice of issuers with a higher reputation is less sensitive to macroeconomic conditions, market credit risk-premiums, prevailing firm credit quality and size of the debt issue. The annualised coupon payments are shown to be a significant factor in determining the debt maturity and reveal a monotonously increasing relationship between credit quality and debt maturity once controlled for. Finally, I show that issuers lacking a credit rating have an implied credit quality positioned between investment-grade and speculative-grade debt.

Suggested Citation

  • Rokkanen, Nikolas, 2007. "With Good Reputation Size Does not Matter: Issue Frequency and the Determinants of Debt Maturity," Working Papers 522, Hanken School of Economics.
    • Handle: RePEc:hhb:hanken:0522
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    References listed on IDEAS

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    Cited by:

    1. Sjöholm, Hans-Kristian, 2007. "The Impact of New Capital Requirements on the Portfolio Decisions of Finnish Pension Institutions," Working Papers 532, Hanken School of Economics.
    2. Kulp-Tåg, Sofie, 2007. "An Empirical Comparison of Linear and Nonlinear Volatility Models for Nordic Stock Returns," Working Papers 525, Hanken School of Economics.
    3. Wägar, Karolina & Björk, Peter & Ravald, Annika & West, Björn, 2007. "Exploring Marketing in Micro Firms," Working Papers 531, Hanken School of Economics.
    4. Segercrantz, Beata, 2007. "Constructing Stability in Software Product Development during Organizational Restructurings," Working Papers 527, Hanken School of Economics.

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    Keywords

    corporate debt maturity; credit risk; debt seniority; subordination; macroeconomic; reputation;
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