Special Purpose Vehicles and Nonfinancial Corporate Finance

Korgaonkar, Sanket; Nini, Greg

doi:10.2139/ssrn.1639548

Cited by 7 publications

(9 citation statements)

References 16 publications

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“…In particular, Lemmon et al (2010) and Korgaonkar and Nini (2010) find that total firm debt increases with the proportion of that debt that is made up by securities backed by safe assets such as accounts receivable.…”

Section: Collateral and Asset Redeployabilitymentioning

confidence: 99%

A Review of Empirical Capital Structure Research and Directions for the Future

Graham

Leary

2011

SSRN Journal

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This paper reviews empirical capital structure research, concentrating on papers published since 2005. We begin by documenting three dimensions of capital structure variation: cross-firm, cross-industry, and within-firm through time. We summarize how well the traditional tradeoff and pecking order approaches explain these sources of variation and highlight their empirical shortcomings. We review recent research that attempts to address these shortcomings, much of which follows the following broad themes: i) Important variables have been mis-measured in empirical tests, ii) The impact of leverage on non-financial stakeholders is important, iii)The supply side of capital affects corporate capital structure, iv) Richer features of financial contracts have been under-researched, v) Value effects due to capital structure appear to be modest over wide ranges of leverage, vi)Estimates of leverage adjustment speeds are biased, vii) Capital structure dynamics have not been adequately † We thank

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Section: Collateral and Asset Redeployabilitymentioning

confidence: 99%

A Review of Empirical Capital Structure Research and Directions for the Future

Graham

Leary

2011

SSRN Journal

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“…Finally, Karaoglu (2005), Korgaonkar and Nini (2010) and Lemmon, Liu and Mao (2010) argue that problems such as information asymmetry, asset substitution and underinvestment (Myers, 1977) faced by companies with high leverage may be minimized through the securitization of assets, since this can be thought of as an extreme form of secured debt.…”

Section: Benefits Of the Securitization Structuresmentioning

confidence: 99%

“…In view of the benefits mentioned in the literature, such as reducing financing costs and the possibility of improvement of financial indicators, it is logical to presume that firms with higher credit risk (worst rating) or with greater incentive to improve their balance sheets should use more securitization structures. According to Korgaonkar and Nini (2010), the benefits of securitization being apparently linked to the segregation of assets of a possible risk of bankruptcy of the transferor company, as the risk of bankruptcy of the transferor company grows, so do the benefits of securitization.…”

Section: Characteristics Of Firms That Securitizementioning

confidence: 99%

“…Moreover, they suggest that firms respond to financial constraints using more off-balance sheet financing. Korgaonkar and Nini (2010) in their study of non-financial companies in 2006, conclude that those that used securitization had relatively high credit risk, but were not in financial constraints. For the authors, these results are related to the costs and benefits of offbalance sheet financing.…”

Section: Characteristics Of Firms That Securitizementioning

confidence: 99%

“…Defining the existence of rating as a proxy for access to capital markets, they empirically found that industries that used securitization had higher probability of having a credit rating when compared to other industries. Aligned with Korgaonkar and Nini (2010), they have assessed that such companies were bigger and greater percentage of accounts receivable, linking the size to the capability of absorbing the costs of structuring a SPV. They also found that the probability of securitization increases when increases the difference between the risks of securitized and non-securitized assets, and that the rating of the transferor company worse after securitization, since assets with lower risk are securitized.…”

Section: Characteristics Of Firms That Securitizementioning

confidence: 99%

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Securitization, Credit Rating and Issuers’ Characteristics

Fernandes¹,

Sheng

Lora

2014

BBR

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Given the growth of securitization through Credit Receivables Investment Funds (Fundos de Investimento em Direitos Creditórios -FIDCs) in Brazil in recent years, this work aims to investigate empirically the relationship between securitization and credit rating in the Brazilian market. All issues of FIDCs held by banks and registered in the CVM from 2005 to July 2010 were analyzed. The two hypotheses discussed by Gorton and Souleles (2005) were confirmed to Brazilian financial institutions. There is evidence of an implied contract between the transferor companies and investors in securitizations made via FIDCs. Companies with higher credit risk, worst ratings, tend to securitize more. However no relationship was found between securitization and asset value, amount of loans or capital ratio.

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The choice between corporate and structured financing: evidence from new corporate borrowings

Pinto

Santos

2019

The European Journal of Finance

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We examine the factors that influence non-financial firms' choice between corporate financing (CF) and structured finance (SF). Using a sample of 4,970 Western European deals closed between 2000 and 2016, we find that floatation costs, information asymmetry, and renegotiation and liquidation risks affect firms' financing decisions. Findings also suggest that firms choose SF when they are less creditworthy and seek long-term financing, and that firms resorting to project finance are smaller and less profitable and have lower short-term debt, lower asset tangibility, and less growth opportunities than corporate bond issuers have. Firms that prefer asset securitization to corporate bonds tend to be smaller, more levered, and less profitable and have lower proportions of fixed assets. Finally, findings are consistent with the hypothesis that firms choose asset securitization to reduce funding costs.

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Special Purpose Vehicles and Nonfinancial Corporate Finance

Cited by 7 publications

References 16 publications

A Review of Empirical Capital Structure Research and Directions for the Future

A Review of Empirical Capital Structure Research and Directions for the Future

Securitization, Credit Rating and Issuers’ Characteristics

The choice between corporate and structured financing: evidence from new corporate borrowings

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