The short term debt vs. long term debt puzzle: a model for the optimal mix

Moro, Andrea; Lucas, Michael; Bazzanella, Claudio and Grassi, Edo (2009). The short term debt vs. long term debt puzzle: a model for the optimal mix. In: 5th Conference on Performance Measurement and Management Control, 23-25 Sep 2009, Nice, France.

DOI: https://doi.org/10.2139/ssrn.1540036

URL: http://www.eiasm.org/frontoffice/event_announcemen...

Abstract

This paper argues that the existing finance literature is inadequate with respect to its coverage of capital structure of small and medium sized enterprises (SMEs). In particular it is argued that the cost of equity (being both conceptually ill defined and empirically non quantifiable) is not applicable to the capital structure decisions for a large proportion of SMEs and the optimal capital structure depends only on the mix of short and long term debt. The paper then presents a model, developed by practitioners for optimising the debt mix and demonstrates its practical application using an Italian firm's debt structure as a case study.

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About

  • Item ORO ID
  • 18587
  • Item Type
  • Conference or Workshop Item
  • Keywords
  • capital structure; equity; short-term debt; long-term debt;
  • Academic Unit or School
  • Faculty of Business and Law (FBL)
  • Copyright Holders
  • © 2009 The Authors
  • Depositing User
  • Andre Moro
CORE (COnnecting REpositories)

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