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Risk and Capital Structure in Asian Project Finance

  • Vaaler, Paul M.

    (U of Illinois at Urbana-Champaign)

  • James, Barclay E.

    (U of Illinois at Urbana-Champaign)

  • Aguilera, Ruth V.

    (U of Illinois at Urbana-Champaign)

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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File URL: http://www.business.illinois.edu/Working_Papers/papers/06-0127.pdf
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Paper provided by University of Illinois at Urbana-Champaign, College of Business in its series Working Papers with number 06-0127.

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Date of creation: Dec 2006
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Handle: RePEc:ecl:illbus:06-0127
Contact details of provider: Web page: http://www.business.uiuc.edu/Working_Papers/Main.asp

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