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The authors examine the effects of institutional investors' Credit Supply Uncertainty (CSU) on the capital structure of the firm using a novel dataset. They measure CSU as the investors' portfolio churn rate, based on the idea that the higher the portfolio churn rate of bondholders, the higher the issuer's refinancing risk, i.e., the risk of not being able to roll over its maturing debt because of supply uncertainty. They find that high CSU leads to lower leverage and lower probability of issuing bonds in the next period, but to higher probability of issuing equity and borrowing from banks.
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