Securitization and Capital Structure in Nonfinancial Firms: An Empirical Investigation

Lemmon, Michael L.; Liu, Laura Xiaolei; Mao, Mike Qinghao; Nini, Greg

doi:10.2139/ssrn.1964647

Cited by 7 publications

(3 citation statements)

References 17 publications

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“…See among othersBarber and Lyon (1996),Eberhart, Maxwell, and Siddique (2004),Lemmon, Liu, Mao, and Nini (2014),Lie (2001), andWilliams and Tang (2009).…”

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confidence: 99%

How sukuk shapes firm performance

2017

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With the large expansion of Islamic finance in the recent years, sukuk, which are the Sharia‐compliant substitute to conventional bonds, are now becoming more prominent. The aim of this study was to examine the impact of sukuk issuance on firm performance. To do so, we analyse how stock market performance and operating performance (OP) are influenced by issuance of sukuk and bonds on a sample of Malaysian listed companies. We consider the short‐term and medium‐term stock market reaction through the computation of cumulative abnormal returns and buy‐and‐hold abnormal returns. We investigate the impact on OP by performing regressions and by calculating abnormal operating performance (AOP) so that we can compare how issuance affects similar firms. We find that sukuk issuance generates a negative stock market reaction both in the short term and in the medium term. We also find evidence that issuing sukuk hampers OP. The analysis of AOP shows that sukuk issuers have better performance than their matched bond issuers, but that sukuk contributes to reduce the gap in performance over time. Overall, our results support the view that sukuk issuance hampers stock market performance, but that it is not attributable to a signalling effect on the bad financial situation of the issuer. We interpret our findings as evidence of adverse selection taking place on the financed projects and agency problems stemming from the specific sukuk structuring with stock market investors more reluctant to invest in sukuk issuers.

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“…See among othersBarber and Lyon (1996),Eberhart, Maxwell, and Siddique (2004),Lemmon, Liu, Mao, and Nini (2014),Lie (2001), andWilliams and Tang (2009).…”

mentioning

confidence: 99%

How sukuk shapes firm performance

2017

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“…Third, this paper extends the literature on the role of securitization and the impact of changes in the regulatory and economic environment on financial markets and asset prices. Important examples of this literature include Calomiris and Mason (2004), Ayotte andGaon (2011), Faltin-Traeger, Johnson, andMayer (2011), Levitin (2013), Acharya, Schnabl, and Suarez (2013), Gennaioli, Shleifer, and Vishny (2013), Lemmon, Liu, Mao, and Nini (2014), Dou, Ryan, and Xie (2018), Tian and Zhang (2018), Furfine (2018), Flynn, Ghent, andTchistyi (2019), and Daley, Green, and Vanasco (2020).…”

Section: Related Literaturementioning

confidence: 99%

The Market Risk Premium for Unsecured Consumer Credit Risk

Fleckenstein¹,

Longstaff²

2020

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is with the UCLA Anderson School and the NBER. We are grateful for the comments and suggestions of Adair Morse, Annette Vissing-Jorgensen, and Antoinette Schoar. All errors are our responsibility. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

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“…Skeptical readers may be concerned with the contemporaneous relationship between my measure of the loan growth rate and other bank-specific characteristics. To address this issue, I apply the two-step methodology used by finance scholars such as GarcÍa ( 2013), Christoffersen et al (2013), Gopalan et al (2014) and Lemmon et al (2014). In the first-stage regression, I estimate the OLS regression of the loan growth rate (LOANGROWTH) on a set of contemporaneous bank-level and country-level variables as follows.…”

Section: The Short-run Impact Of Excess Loan Growth On Non-performing Loansmentioning

confidence: 99%

The Consequences of Bank Loan Growth: Evidence from Asia

Vithessonthi

2016

SSRN Journal

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Securitization and Capital Structure in Nonfinancial Firms: An Empirical Investigation

Cited by 7 publications

References 17 publications

How sukuk shapes firm performance

How sukuk shapes firm performance

The Market Risk Premium for Unsecured Consumer Credit Risk

The Consequences of Bank Loan Growth: Evidence from Asia

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