In this paper we expand the scope of our earlier study, examining broader facets
corporate financial architecture. Here we focus specifically on the maturity and
priority of the firm's debt by looking at 6000 firms during the period 1981-1993.
As in our earlier study, we test three basic explanations of these corporate financing
choices. In addition to the incentive-contracting argument described above, we also
test "signaling" and "tax" explanations. Consistent with our findings, this study
provides strong evidence for the incentive-contracting explanation, but only weak
support for the signaling and tax arguments.