Product diversification and debt maturity : North-American companies

Abstract

This paper provides an explanation whether product diversified firms tend to have more long-term debt compared to non-diversified firms. To conduct this study a sample of 571486 firms (North-American) was taken from a period of 1976 to 2013. For simplicity, only firms with operations the within US and Canada were considered. Geographic diversified firms were excluded. The long-term debt level of diversified firm was compared with non-diversified firms for various product lines, and the results show that diversified firms have more long-term debt compared to non-diversified firms. Moreover, I also find that debt level increases with the increase of product lines.