Cash flows and debt maturity

Noe, Thomas, Goswami, Gautam and Rebello, Michael (1997) Cash flows and debt maturity. Economica, 64 (254). pp. 303-316.

Abstract

In an asymmetric information framework, a number of authors have demonstrated the existence and uniqueness of short-term debt pooling equilibria in the absence of dissipative costs. We show that short-term debt pooling is robust to a broad range of deviations from stationarity and intertemporal independence. However, with intertemporal dependence, separating equilibria exist in which short-term debt signals favourable information. Non-stationary allows for separating equilibria in which long-term debt signals favourable information. A range of deviations from stationarity and intertemporal independence also support long-term debt pooling equilibria.

Item Type: Article
Keywords: cash flow; corporate debt; risk management
Subject(s): Finance
Centre: Faculty of Finance
Date Deposited: 10 Nov 2011 12:52
Last Modified: 23 Oct 2015 14:06
URI: http://eureka.sbs.ox.ac.uk/id/eprint/1128

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