Asset salability and debt maturity

Evidence from nineteenth-century American railroads

Research output: Contribution to journalArticle

40 Citations (Scopus)

Abstract

I investigate the effect of assets liquidation values on capital structure by exploiting the diversity of track gauges in nineteenth-century American railroads. The abundance of track gauges limited the redeployability of rolling stock and tracks to potential users with similar track gauge. Moreover, potential demand for both rolling stock and tracks was further diminished when many railroads went under equity receiverships. I find that the potential demand for a railroads rolling stock and tracks were significant determinants of debt maturity and the amount of debt that was issued by railroads. The results are consistent with liquidation values models of financial contracting and capital structure. (JEL G32, G33, L92, N21, N71).

Original languageEnglish (US)
Pages (from-to)1545-1584
Number of pages40
JournalReview of Financial Studies
Volume22
Issue number4
DOIs
StatePublished - Apr 1 2009

Fingerprint

Railroad
Assets
Debt maturity
Liquidation
Capital structure
Financial contracting
Financial capital
Equity
Debt

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

Cite this

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Asset salability and debt maturity : Evidence from nineteenth-century American railroads. / Benmelech, Efraim.

In: Review of Financial Studies, Vol. 22, No. 4, 01.04.2009, p. 1545-1584.

Research output: Contribution to journalArticle

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