We investigate whether and how firms manage their rollover risk by having a dispersed bond maturity structure (granularity). Granularity can be achieved or maintained by frequently issuing sets of bonds with different maturities. We find that firms with higher granularity have higher availability of financing, lower cost of financing, lower financial constraints and lower stock return volatility. The effects are stronger for firms that face higher rollover risk. The evidence suggests that spreading out bond maturities is an effective corporate policy to manage rollover risk.

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doi.org/10.1016/j.jbankfin.2015.11.001, hdl.handle.net/1765/79167
ERIM Top-Core Articles
Journal of Banking & Finance
Erasmus Research Institute of Management

Norden, L., Roosenboom, P., & Wang, T. (2016). The effects of corporate bond granularity. Journal of Banking & Finance, 63, 25–34. doi:10.1016/j.jbankfin.2015.11.001