The Dynamics of Corporate Debt Management, Decision Rules, and Some Empirical Evidence

Abstract

This study deals with the problem of debt — composition of the firm — specifically, the optimal mix of short- and long-term debt, or the optimal maturity composition of the total debt. It can be viewed as a subproblem of the more familiar determination of the optimal mix between total debt and owner's equity (Modigliani and Miller [15 and 16], Durand [3], Schwartz [18], Solomon [20], etc.).