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Project financing versus corporate financing under asymmetric information

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Author Info
Anton Miglo () (University of Guelph, Department of Economics)

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Abstract

In recent years financing through the creation of an independent project company or financing by non-recourse debt has become an important part of corporate decisions. Shah and Thakor (JET, 1987) argue that project financing can be optimal when asymmetric information exists between firm's insiders and market participants. In contrast to that paper, we provide an asymmetric information argument for project financing without relying on corporate taxes, costly information production or an assumption that firms have the same mean of return. In addition, the model generates new predictions regarding asset securitization

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Publisher Info
Paper provided by University of Guelph, Department of Economics in its series Working Papers with number 0812.

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Length: 25 pages
Date of creation: 2008
Date of revision:
Handle: RePEc:gue:guelph:2008-12

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Related research
Keywords: asymmetric information; non-recourse debt; project-financing; asset securitization.;

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Find related papers by JEL classification:
C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information
G29 - Financial Economics - - Financial Institutions and Services - - - Other
G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Capital and Ownership Structure
O22 - Economic Development, Technological Change, and Growth - - Development Planning and Policy - - - Project Analysis

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References listed on IDEAS
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  3. Myers, Stewart C. & Majluf, Nicolás S., 1945-, 1984. "Corporate financing and investment decisions when firms have information that investors do not have," Working papers 1523-84., Massachusetts Institute of Technology (MIT), Sloan School of Management. [Downloadable!]
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    Other versions:
  5. Nachman, David C & Noe, Thomas H, 1994. "Optimal Design of Securities under Asymmetric Information," Review of Financial Studies, Oxford University Press for Society for Financial Studies, vol. 7(1), pages 1-44. [Downloadable!] (restricted)
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    Other versions:
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  16. Charles Calomiris & Joseph Mason, 2004. "Credit Card Securitization and Regulatory Arbitrage," Journal of Financial Services Research, Springer, vol. 26(1), pages 5-27, August. [Downloadable!] (restricted)
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