Resumen de With good reputation size does not matter: issue frequency and the determinants of debt maturity
This article examines empirically the effect firm reputation has on the determinants of debt maturity. Utilizing data from European primary bond market between 1999 and 2005, I find that reputation is a determinant of the maturity of newly issued debt, where firms of high or low reputation issue short-term debt and firms of mediocre reputation issue long-term debt. Thus, reputation appears to mimic a nonmonotonic relationship between credit quality and maturity. The annualized 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 (IG) and Speculative Grade (SG) debt.
