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The choice between corporate and structured financing
- Source :
- Repositório Científico de Acesso Aberto de Portugal, Repositório Científico de Acesso Aberto de Portugal (RCAAP), instacron:RCAAP
- Publication Year :
- 2020
- Publisher :
- Routledge, 2020.
-
Abstract
- We examine the factors that influence nonfinancial firms’ choice of issuing standard corporate bonds vis-à-vis contracting structured finance, in the form of project finance or asset securitization arrangements. Using a data set of deals closed by 4,700 European borrowers between 2000 and 2016, we find that informational frictions and issuance costs affect public firms’ borrowing source choices. Findings suggest that borrowers choose structured finance when they are relatively smaller, less profitable, have lower asset tangibility, and seek long-term financing. Our findings also document that borrowers resorting to asset securitization tend to have larger growth opportunity sets. Borrowers resorting to project finance are less creditworthy than corporate bond issuers and, on average, asset securitization deals have an 87.6 basis points borrowing cost advantage over corporate bond deals for switchers.
- Subjects :
- Finance
050208 finance
Off-balance-sheet financing
Security design
business.industry
Debt financing choice
Bond
05 social sciences
Economics, Econometrics and Finance (miscellaneous)
Corporate bond
Asset securitization
Issuer
0502 economics and business
Project finance
Structured finance
Securitization
Business
Asset (economics)
Corporate bonds
Off-balance-sheet
Subjects
Details
- Language :
- English
- ISSN :
- 14664364 and 1351847X
- Volume :
- 26
- Issue :
- 13
- Database :
- OpenAIRE
- Journal :
- European Journal of Finance
- Accession number :
- edsair.doi.dedup.....be874cf77a62086638db44e2e8b0a9e1