This file is part of IDEAS , which uses RePEc data
[ Papers |
Articles |
Software |
Books |
Chapters |
Authors |
Institutions |
JEL Classification |
NEP reports |
Search |
New papers by email |
Author registration |
Rankings |
Volunteers |
FAQ |
Blog |
Help! ]
Optimal Capital Structure and Project Financing Author info | Abstract | Publisher info | Download info | Related research | Statistics Salman Shah (University of Toronto)
Anjan V. Thakor (Washington University in St. Louis)
Additional information is available for the following
registered author(s):
We examine the financing and incorporation modes for new projects. There are two objectives. The first is to provide a theory of optimal capital structure that links risk, leverage, and value and is particularly applicable to large firms. Counter to conventional wisdom, we show riskier firms acquire more debt, pay higher interest rates, and have higher values in equilibrium. Second, we provide an economic rational for project financing which entails organizing a new project legally distinct from the firm's other assets. We explain why project financing involves higher leverage than conventional financing and why highly risky assets are project-financed.
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page . Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
Paper provided by EconWPA in its series Finance with number
0411041.
Download reference. The following formats are available: HTML
(with abstract ),
plain text
(with abstract ),
BibTeX ,
RIS (EndNote, RefMan, ProCite),
ReDIF
Length: 35 pages
Date of creation: 29 Nov 2004Date of revision:
Handle: RePEc:wpa:wuwpfi:0411041Note: Type of Document - pdf; pages: 35Contact details of provider: Web page: http://129.3.20.41
For technical questions regarding this item, or to correct its listing, contact: (EconWPA).
Keywords: Other versions of this item:
Find related papers by JEL classification: G - Financial Economics
This paper has been announced in the following NEP Reports :
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.: Kim, E Han, 1978.
"A Mean-Variance Theory of Optimal Capital Structure and Corporate Debt Capacity ,"
Journal of Finance ,
American Finance Association, vol. 33(1), pages 45-63, March.
[Downloadable!] (restricted)
Stephen A. Ross, 1977.
"The Determination of Financial Structure: The Incentive-Signalling Approach ,"
Bell Journal of Economics ,
The RAND Corporation, vol. 8(1), pages 23-40, Spring.
[Downloadable!] (restricted)
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!]
Warner, Jerold B, 1977.
"Bankruptcy Costs: Some Evidence ,"
Journal of Finance ,
American Finance Association, vol. 32(2), pages 337-47, May.
[Downloadable!] (restricted)
Stewart C. Myers & Nicholas S. Majluf, 1984.
"Corporate Financing and Investment Decisions When Firms Have InformationThat Investors Do Not Have ,"
NBER Working Papers
1396, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted)
Heinkel, Robert, 1982.
" A Theory of Capital Structure Relevance under Imperfect Information ,"
Journal of Finance ,
American Finance Association, vol. 37(5), pages 1141-50, December.
[Downloadable!] (restricted)
Myers, Stewart C. & Majluf, Nicholas S., 1984.
"Corporate financing and investment decisions when firms have information that investors do not have ,"
Journal of Financial Economics ,
Elsevier, vol. 13(2), pages 187-221, June.
[Downloadable!] (restricted)
Chaney, Paul K. & Thakor, Anjan V., 1985.
"Incentive effects of benevolent intervention : The case of government loan guarantees ,"
Journal of Public Economics ,
Elsevier, vol. 26(2), pages 169-189, March.
[Downloadable!] (restricted)
Other versions: Myerson, Roger B, 1979.
"Incentive Compatibility and the Bargaining Problem ,"
Econometrica ,
Econometric Society, vol. 47(1), pages 61-73, January.
[Downloadable!] (restricted)
Other versions: Diamond, Douglas W, 1984.
"Financial Intermediation and Delegated Monitoring ,"
Review of Economic Studies ,
Blackwell Publishing, vol. 51(3), pages 393-414, July.
[Downloadable!] (restricted)
DeAngelo, Harry & Masulis, Ronald W., 1980.
"Optimal capital structure under corporate and personal taxation ,"
Journal of Financial Economics ,
Elsevier, vol. 8(1), pages 3-29, March.
[Downloadable!] (restricted)
Talmor, Eli & Haugen, Robert & Barnea, Amir, 1985.
"The Value of the Tax Subsidy on Risky Debt ,"
Journal of Business ,
University of Chicago Press, vol. 58(2), pages 191-202, April.
[Downloadable!] (restricted)
Riley, John G, 1979.
"Informational Equilibrium ,"
Econometrica ,
Econometric Society, vol. 47(2), pages 331-59, March.
[Downloadable!] (restricted)
Other versions: Ramakrishnan, Ram T S & Thakor, Anjan V, 1984.
"Information Reliability and a Theory of Financial Intermediation ,"
Review of Economic Studies ,
Blackwell Publishing, vol. 51(3), pages 415-32, July.
[Downloadable!] (restricted)
Rothschild, Michael & Stiglitz, Joseph E., 1970.
"Increasing risk: I. A definition ,"
Journal of Economic Theory ,
Elsevier, vol. 2(3), pages 225-243, September.
[Downloadable!] (restricted)
Joseph E. Stiglitz, 1972.
"Some Aspects of the Pure Theory of Corporate Finance: Bankruptcies and Take-Overs ,"
Bell Journal of Economics ,
The RAND Corporation, vol. 3(2), pages 458-482, Autumn.
[Downloadable!] (restricted)
Miller, Merton H, 1977.
"Debt and Taxes ,"
Journal of Finance ,
American Finance Association, vol. 32(2), pages 261-75, May.
[Downloadable!] (restricted)
Ross, Stephen A, 1985.
" Debt and Taxes and Uncertainty ,"
Journal of Finance ,
American Finance Association, vol. 40(3), pages 637-57, July.
[Downloadable!] (restricted)
Full
references Cited by : (explanations , Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.)
Kleimeier,Stefanie & William L. Megginson, 2002.
"An empirical analysis of limited recourse project ,"
Research Memoranda
066, Maastricht : METEOR, Maastricht Research School of Economics of Technology and Organization.
[Downloadable!]
Dailami, Mansoor & Hauswald, Robert, 2001.
"Contract risks and credit spread determinants in the international project bond market ,"
Policy Research Working Paper Series
2712, The World Bank.
[Downloadable!]
Yuk-Shee Chan & Stuart I. Greenbaum & Anjan V. Thakor, 2004.
"Is Fairly Priced Deposit Insurance Possible? ,"
Finance
0411018, EconWPA.
[Downloadable!]
Other versions: Marco Sorge & Blaise Gadanecz, 2008.
"The term structure of credit spreads in project financeSupplementary material for this article can be found at
,"
International Journal of Finance & Economics ,
John Wiley & Sons, Ltd., vol. 13(1), pages 68-81.
[Downloadable!]
Anton Miglo, 2008.
"Project financing versus corporate financing under asymmetric information ,"
Working Papers
0812, University of Guelph, Department of Economics.
[Downloadable!]
Fohlin, Caroline, 1998.
"Financing Decisions and Corporate Capital Structure in the Later Stages of the German Industrialization ,"
Working Papers
1030, California Institute of Technology, Division of the Humanities and Social Sciences.
[Downloadable!]
Ahron R. Ofer & Anjan V. Thakor, 2004.
"A Theory of Stock Price Responses to Alternative Corporate Cash Disbursement Methods: Stock Repurchase and Dividends ,"
Finance
0411031, EconWPA.
[Downloadable!]
Other versions: Christa Hainz & Stefanie Kleimeier, 2006.
"Project Finance as a Risk-Management Tool in International Syndicated Lending ,"
Discussion Papers
183, SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
[Downloadable!]
Christa Hainz & Stefanie Kleimeier, 2004.
"Political Risk in Syndicated Lending:Theory and Empirical Evidence Regarding the Use of ProjectFinance ,"
Departmental Working Papers
197, Tor Vergata University, CEIS.
[Downloadable!]
Access and
download statistics Did you know? RePEc stands for Research Papers in Economics.
This page was last updated on 2009-11-17.
This information is provided to you by IDEAS at the Department of Economics , College of Liberal Arts and Sciences , University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics .