Industry Structure and Corporate Debt Maturity

We examine how industry competition affects firms' choice of short-term debt. We find that the percentage of short-term debt is positively related to industry concentration at lowlevels of concentration, and inversely related to industry concentration at higher levels of concentration. This nonlinear relation is stronger in industries where firms are either more homogeneous or compete more aggressively. Moreover, we find that firms with shorter-maturity debt are less aggressive than their rivals in the product market. The overall evidence suggests that although financial contracts alleviate agency problems, they exacerbate the risk of predation.