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Risk and Capital Structure in Asian Project Finance

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  • Vaaler, Paul M.

    (U of Illinois at Urbana-Champaign)

  • James, Barclay E.

    (U of Illinois at Urbana-Champaign)

  • Aguilera, Ruth V.

    (U of Illinois at Urbana-Champaign)

Abstract

We develop and test a multi-level theoretical framework for understanding country-, industry-, syndicate-, firm- and project-specific factors shaping the capital structure and broader risk profile of a quintessentially Asian form of foreign direct investment ("FDI") called project finance. Empirical analyses of 238 projects announced for 13 Asian countries from 1995-2004 support hypotheses derived from our framework, and suggest that country-level institutional factors such as a Common Law legal system, syndicate-level factors such as the concentration of equity among syndicate sponsors, and project-level factors such as the US dollar cost of the project all substantially affect project capital structure and risk.

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Bibliographic Info

Paper provided by University of Illinois at Urbana-Champaign, College of Business in its series Working Papers with number 06-0127.

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Date of creation: Dec 2006
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Handle: RePEc:ecl:illbus:06-0127

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Web page: http://www.business.uiuc.edu/Working_Papers/Main.asp
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Cited by:
  1. Pierru, Axel & Roussanaly, Simon & Sabathier, Jérôme, 2013. "Capital structure in LNG infrastructures and gas pipelines projects: Empirical evidences and methodological issues," Energy Policy, Elsevier, vol. 61(C), pages 285-291.
  2. Ramirez, Andres & Kwok, Chuck C.Y., 2010. "Settling the debate on multinational capital structure using the CEPR measure," Journal of Multinational Financial Management, Elsevier, vol. 20(4-5), pages 251-271, December.

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