Score contribution per author:
α: calibrated so average coauthorship-adjusted count equals average raw count
This study investigates the combined effects of monetary policy uncertainty (MPU) and firm characteristics on Korean heterogeneous firms' capital structures in the short- and long-terms. The results reveal that while both MPU and firm characteristics play a key role in short-term debt financing, they appear to be less significant in long-term debt financing. Such asymmetric responses are mainly attributed to different business strategies and debt maturities. Firms make decisions on long-term debt financing based on their internal plans rather than interest rates or MPU. In contrast, firms can choose the appropriate timing to refinance or issue debts at a more favorable interest rate when financing through short-term debts. We find that the marginal effects of firm characteristics on short-term debt ratios vary with the level of MPU. Furthermore, the marginal effects of MPU differ across heterogeneous firms because of distinct firm characteristics. However, an increase in MPU leads to a decline in short-term debt ratios over the sample period. Our results provide some insights into the design of monetary policies to manage highly leveraged firms especially with short-term debts.