IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this article

Asset Securitization and Asymmetric Information

  • Edward M. Iacobucci
  • Ralph A. Winter

We analyze the incentives for asset securitization that flow from informational asymmetries within a corporation. Within the framework of “hidden-action†asymmetries, securitization of those cash flows that are relatively insensitive to managerial effort leaves critical incentive devices more high powered and more focused on cash flows that matter. In addition, asset securitization exchanges a stream of future cash inflows for a lump-sum cash inflow, which enhances monitoring and control of management expenditures. Within the “hidden-information†framework, asset securitization can be explained by asymmetric information (1) between insiders and outside investors about the value of nonsecuritized assets or (2) between insiders and outsider investors about the value of securitized assets. In both hidden-information theories, asset securitization is driven by the propensity of the market to allocate assets to investors who are best informed about asset values.

If you experience problems downloading a file, check if you have the proper application to view it first. 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.

File URL:
Download Restriction: Access to the online full text or PDF requires a subscription.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by University of Chicago Press in its journal The Journal of Legal Studies.

Volume (Year): 34 (2005)
Issue (Month): 1 (01)
Pages: 161-206

in new window

Handle: RePEc:ucp:jlstud:v:34:y:2005:p:161-206
Contact details of provider: Web page:

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:ucp:jlstud:v:34:y:2005:p:161-206. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Journals Division)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.