Product diversification and debt maturity: an empirical investigation for the USA

Abstract

This study investigates whether product diversified firms tend to have more long term debt compared to non-diversified firms. To conduct this study a sample of 45676 U.S. based firms was taken from a period of 1969 to 2009. Only firms with operations within the United States were considered for this study. Geographic diversified firms were excluded for simplicity. The long-term debt level of non-diversified firms was compared with product diversified firms for various product lines, and the results showed that product diversified firms do have more long term debt compared to non-diversified firm’s debt. Additionally debt levels increase with the increase in the number of products.