Granularity of Corporate Debt

Jaewon Choi, Dirk Hackbarth, and Josef Zechner

We study the extent to which firms spread out their debt maturity dates, and refer to it as “granularity of corporate debt.” Guided by a model with rollover frictions we document based on a large sample of corporate bond issuers that maturities are more dispersed for larger and more mature firms, for firms with better investment opportunities, with higher leverage, and with lower profitability. During the recent financial crisis firms with valuable investment opportunities implemented more dispersed maturity structures. Finally, firms manage granularity actively and adjust toward target levels.