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Debt decisions in deregulated industries

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  • Ovtchinnikov, Alexei V.
Abstract
Deregulation significantly affects firms’ debt decisions. Prior to deregulation, regulated firms depend more on long-term and public debt but reduce this dependence considerably during deregulation. Cross-sectional analysis shows that the lower use of long-term and public debt results from changing firm sensitivities to determinants of debt decisions triggered by deregulation. Consistent with credit and liquidity risk theories of debt maturity, the concave relation between firm quality and debt maturity is attenuated among regulated firms. Inconsistent with these theories, the convex relation between firm quality and public debt issues exists only among regulated firms. I find limited support for other theories.

Suggested Citation

  • Ovtchinnikov, Alexei V., 2016. "Debt decisions in deregulated industries," Journal of Corporate Finance, Elsevier, vol. 36(C), pages 230-254.
    • Handle: RePEc:eee:corfin:v:36:y:2016:i:c:p:230-254
    DOI: 10.1016/j.jcorpfin.2015.12.010
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    More about this item

    Keywords

    Debt decisions; Debt maturity; Public and private debt issues; Deregulation;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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