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dc.contributor.authorBaker, Malcolm-
dc.contributor.authorGreenwood, Robin-
dc.contributor.authorWurgler, Jeffrey-
dc.description.abstractWe document that firms tend to borrow at the lowest-cost maturity. In aggregate time series data, the share of long-term debt issues in total debt issues is negatively related to subsequent excess bond returns, meaning that firms substitute toward long-term debt when the cost of long-term debt is low relative to the cost of short-term debt. The longterm share is also contemporaneously negatively related to the components of the longterm interest rate that predict higher excess bond returns, including inflation, the real short-term rate, and the term spread. The results suggest that firms use predictable variation in excess bond returns in an effort to reduce the cost of capital.en
dc.titleDo firms borrow at the lowest-cost maturity? The long-term share in debt issues and predictable variation in bond returnsen
dc.typeWorking Paperen
Appears in Collections:Finance Working Papers

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