Agency costs and the demand and supply of secured debt and asset securitization
Current accounts of the demand and supply of secured debt and asset securitization are in stark contrast with observed debtor behavior. This Article addresses the disconnects between current theories and observed practices by considering the effects of the agency costs associated with corporations a...
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| Veröffentlicht in: | Yale journal on regulation 2002-07, Vol.19 (2), p.413-470 |
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| container_title | Yale journal on regulation |
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| creator | Ngo, Minh Van |
| description | Current accounts of the demand and supply of secured debt and asset securitization are in stark contrast with observed debtor behavior. This Article addresses the disconnects between current theories and observed practices by considering the effects of the agency costs associated with corporations and the risk-aversion associated with non-corporate forms of business enterprises on the demand for secured debt. Integrating agency costs and risk-aversion into the debtor decision between secured and unsecured debt suggests a strong bias against secured debt because free assets serve as a safety mechanism for managers similar to Jensen's theory with respect to free cash flow. An analysis of the supply of secured debt and asset securitization illustrates that a significant, if not primary, element of both species of financing is the radically different way in which secured debt and asset securitization attempt to decrease the likelihood of debtor insolvency. |
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| identifier | ISSN: 0741-9457 |
| ispartof | Yale journal on regulation, 2002-07, Vol.19 (2), p.413-470 |
| issn | 0741-9457 2376-5925 |
| language | eng |
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| source | HeinOnline Law Journal Library |
| subjects | Assets Bankruptcy laws Bias Collateral Cost control Costs Debt Debt financing Debtors Decision making Equilibrium Insolvency Interest rates Law Popularity Risk Risk aversion Securitization Stockholders Studies Supply & demand Supply and demand Theory |
| title | Agency costs and the demand and supply of secured debt and asset securitization |
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