Asset Securitization and Asymmetric Information
We analyze the incentives for asset securitization that flow from informational asymmetries within a corporation. Within the framework of â€œhidden-actionâ€ 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 â€œhidden-informationâ€ 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.
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.:
- Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680, December.
- D'Souza, Julia & Jacob, John, 2000. "Why firms issue targeted stock," Journal of Financial Economics, Elsevier, vol. 56(3), pages 459-483, June.
- Henry G. Manne, 1965. "Mergers and the Market for Corporate Control," Journal of Political Economy, University of Chicago Press, vol. 73, pages 351-351.
- Michael Spence, 1973. "Job Market Signaling," The Quarterly Journal of Economics, Oxford University Press, vol. 87(3), pages 355-374.
- Fama, Eugene F, 1970. "Efficient Capital Markets: A Review of Theory and Empirical Work," Journal of Finance, American Finance Association, vol. 25(2), pages 383-417, May.
- Steven Shavell, 1979. "Risk Sharing and Incentives in the Principal and Agent Relationship," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 55-73, Spring.
- 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.
- Mathias Dewatripont & Ian Jewitt & Jean Tirole, 1999.
"The economics of career concerns: part 1 :comparing information structures,"
ULB Institutional Repository
2013/9617, ULB -- Universite Libre de Bruxelles.
- Mathias Dewatripont & Ian Jewitt & Jean Tirole, 1999. "The Economics of Career Concerns, Part I: Comparing Information Structures," Review of Economic Studies, Oxford University Press, vol. 66(1), pages 183-198.
- Sappington, David, 1983. "Limited liability contracts between principal and agent," Journal of Economic Theory, Elsevier, vol. 29(1), pages 1-21, February.
- Demski, Joel S. & Sappington, David, 1984. "Optimal incentive contracts with multiple agents," Journal of Economic Theory, Elsevier, vol. 33(1), pages 152-171, June.
- Ross, Stephen A, 1973. "The Economic Theory of Agency: The Principal's Problem," American Economic Review, American Economic Association, vol. 63(2), pages 134-139, May.
- Laux, Christian, 2001. "Project-Specific External Financing and Headquarters Monitoring Incentives," Journal of Law, Economics and Organization, Oxford University Press, vol. 17(2), pages 397-412, October.
- 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.
- 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.
- Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
- Henry G. Manne, 1965. "Mergers and the Market for Corporate Control," Journal of Political Economy, University of Chicago Press, vol. 73, pages 110-110.
- Schipper, Katherine & Smith, Abbie, 1986. "A comparison of equity carve-outs and seasoned equity offerings : Share price effects and corporate restructuring," Journal of Financial Economics, Elsevier, vol. 15(1-2), pages 153-186.
- John C. McManus, 1975. "The Costs of Alternative Economic Organizations," Canadian Journal of Economics, Canadian Economics Association, vol. 8(3), pages 334-350, August.
- Holmstrom, Bengt & Milgrom, Paul, 1991. "Multitask Principal-Agent Analyses: Incentive Contracts, Asset Ownership, and Job Design," Journal of Law, Economics and Organization, Oxford University Press, vol. 7(0), pages 24-52, Special I.
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 references are entirely missing, you can add them using this form.