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Risk and capital structure in Asian project finance

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  • Paul Vaaler

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  • Barclay James

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  • Ruth Aguilera

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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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Suggested Citation

  • Paul Vaaler & Barclay James & Ruth Aguilera, 2008. "Risk and capital structure in Asian project finance," Asia Pacific Journal of Management, Springer, vol. 25(1), pages 25-50, January.
  • Handle: RePEc:kap:asiapa:v:25:y:2008:i:1:p:25-50
    DOI: 10.1007/s10490-007-9045-4
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    References listed on IDEAS

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    Cited by:

    1. Nelson, James & Simshauser, Paul, 2013. "Is the Merchant Power Producer a broken model?☆☆The views expressed in this paper are those of the authors and any errors or omissions remain the responsibility of the authors," Energy Policy, Elsevier, vol. 53(C), pages 298-310.
    2. A. Garcia-Bernabeu & F. Mayor-Vitoria & F. Mas-Verdu, 2015. "Project Finance Recent Applications and Future Trends: The State of the Art," International Journal of Business and Economics, College of Business and College of Finance, Feng Chia University, Taichung, Taiwan, vol. 14(2), pages 159-178, December.
    3. repec:spr:manint:v:57:y:2017:i:2:d:10.1007_s11575-016-0294-7 is not listed on IDEAS
    4. 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.
    5. Müllner, Jakob, 2016. "From uncertainty to risk—A risk management framework for market entry," Journal of World Business, Elsevier, vol. 51(5), pages 800-814.
    6. 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.
    7. Jakob Müllner, 2017. "International project finance: review and implications for international finance and international business," Management Review Quarterly, Springer;Vienna University of Economics and Business, vol. 67(2), pages 97-133, April.

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