Asset salability and debt maturity: Evidence from nineteenth-century American railroads

Efraim Benmelech*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

47 Scopus citations


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
Issue number4
StatePublished - Apr 1 2009

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

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