Project financing versus corporate financing under asymmetric information
In recent years financing through the creation of an independent project company or financing by non-recourse debt has become an important part of corporate decisions. Shah and Thakor (JET, 1987) argue that project financing can be optimal when asymmetric information exists between firm's insiders and market participants. In contrast to that paper, we provide an asymmetric information argument for project financing without relying on corporate taxes, costly information production or an assumption that firms have the same mean of return. In addition, the model generates new predictions regarding asset securitization
|Date of creation:||2008|
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