On the Study of Debt Structure Determinants

  • Author
  • Lucas Serrão Macoris
  • Abstract
  • While the study of capital structure is widespread in the corporate finance literature, debt structure - how and why firms choose a specific setting for their debt - remains a puzzle. In this paper, I provide empirical evidence that changes in passive ownership have the potential to affect the choice of firms' debt structure over time. I do so by exploiting exogenous variation in mutual funds' passive ownership due to \textit{Russell 1000/2000} index assignments between 2010 and 2019 in a regression-discontinuity-design setting. More specifically, I ask whether increases in passive ownership are related to changes in firms' debt concentration among different debt contract types. Estimates show that a one standard deviation increase in passive ownership is related to a 29\% decrease in debt concentration. In a subsequent set of results, I show that these results are entirely driven by smaller firms, are mostly leaned towards increases in \textit{Commercial Papers}, \textit{Term Loans} and \textit{Revolving Credit}, and are unrelated to other firms' \textit{ex-post} fundamentals. The results remain robust after different specifications and after adding a wide set of controls. In the final section of the study, I discuss the implications of these results and how they relate to some of the hypotheses previously highlighted in the most recent literature on debt structure and its determinants. This work is the first to provide empirical evidence on the role of passive ownership in explaining debt structure decisions, and contributes to the growing literature on how and why do firms adjust their debt structure decisions over time. 

  • Keywords
  • Debt Structure, Passive Investors, Corporate Finance
  • Modality
  • Comunicação oral
  • Subject Area
  • Finanças Corporativas e Bancárias (Corporate Finance and Banking)
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  • Apreçamento de Ativos (Asset Pricing)
  • Finanças Corporativas e Bancárias (Corporate Finance and Banking)
  • Econometria Financeira (Financial Econometrics)
  • Engenharia Financeira (Financial Engineering)
  • Macrofinanças (Macrofinance)