@techreport{NBERw18160,
 title = "A Theory of Debt Maturity: The Long and Short of Debt Overhang",
 author = "Douglas W. Diamond and Zhiguo He",
 institution = "National Bureau of Economic Research",
 type = "Working Paper",
 series = "Working Paper Series",
 number = "18160",
 year = "2012",
 month = "June",
 URL = "http://www.nber.org/papers/w18160",
 abstract = {Debt maturity influences debt overhang: the reduced incentive for highly- levered borrowers to make real investments because some value accrues to debt.  Reducing maturity can increase or decrease overhang even when shorter-term debt’s value depends less on firm value. Future overhang is more volatile for shorter-term debt, making future investment incentives volatile and influencing immediate investment incentives. With immediate investment, shorter-term debt typically imposes lower overhang; longer-term debt can impose less if firm value is more volatile in bad times. For future investments, reduced correlation between the value of assets-in-place and profitability of investment increases the overhang of shorter-term debt.},
}