This paper investigates the effect of investor sentiment on corporate debt-financing decisions and debt maturity using the data on US-listed firms from 2000 to 2019. Based on the empirical results, we find that investor sentiment has a negative but nonsignificant relationship with the probability of debt financing. Furthermore, investor sentiment (change) does not show a consistent and significant effect on the debt size (change) for firms issuing debts. However, market uncertainty has a positive effect on corporate debt-financing decisions. In addition, we find that when market uncertainty is high, firms may tend to raise capital from equity markets and reduce debt size, which improves their financial leverage. Furthermore, we find a significant negative relationship between investor sentiment and debt maturity for the 0.1, 0.5, and 0.7 quantiles of debt maturity.
|Translated title of the contribution
|Exploring the Effect of Investor Sentiments on Debt Issuance and Maturity
|Number of pages
|中華會計學刊 = Taiwan Accounting Review
|Published - 2022