Annals of Finance

, Volume 14, Issue 4, pp 465–487 | Cite as

Debt financing in private and public firms

  • Kim P. Huynh
  • Teodora Paligorova
  • Robert Petrunia
Research Article


Using administrative confidential data on the universe of Canadian corporate firms, we compare debt financing choices of private and public firms. Private firms have higher leverage ratios, which are entirely driven by private firms’ stronger reliance on short-term debt. Further, private firms rely more of leverage during economic expansions, while public firms rely on equity financing. Specifically, private firms manage to increase their long-term debt during expansions, while short-term debt is used during downturns. Our findings have implications for a better understanding of the role of asymmetric information in private firms’ capital structure decisions.


Capital structure Private firms Leverage 

JEL Classification

G30 L11 


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Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2018

Authors and Affiliations

  • Kim P. Huynh
    • 1
  • Teodora Paligorova
    • 2
  • Robert Petrunia
    • 3
  1. 1.Bank of CanadaOttawaCanada
  2. 2.Federal Reserve BoardWashingtonUSA
  3. 3.Department of EconomicsLakehead UniversityThunder BayCanada

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