Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/216815 
more recent Version: 
Year of Publication: 
2020
Series/Report no.: 
IWH Discussion Papers No. 6/2020
Publisher: 
Halle Institute for Economic Research (IWH), Halle (Saale)
Abstract: 
This paper investigates whether and how economic policy uncertainty affects corporate debt maturity. Using a cross-country firm-level dataset for France, Germany, Spain, and Italy from 1996 to 2010, we find that an increase in economic policy uncertainty is significantly associated with a shortened debt maturity. Specifically, a 1% increase in economic policy uncertainty is associated with a 0.22% decrease in the long-term debt-to-assets ratio and a 0.08% decrease in debt maturity. Moreover, the impacts of economic policy uncertainty are stronger for innovation-intensive firms. We use firms' flexibility in changing debt maturity and the deviation to leverage target to gauge the causal relationship, and identify the reduced investment and steepened term structure as transmission mechanisms.
Subjects: 
economic policy uncertainty
debt maturity
capital structure
corporate investment
JEL: 
D81
G32
Persistent Identifier of the first edition: 
Additional Information: 
A completely revised version of this paper has been published as Li, Xiang: How Does Economic Policy Uncertainty Affect Corporate Debt Maturity? IWH Discussion Papers 5/2022. Halle (Saale) 2021: http://hdl.handle.net/10419/249745
Document Type: 
Working Paper

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