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Securitization and capital structure in nonfinancial firms: an empirical investigation
journal contribution
posted on 2014-08-01, 00:00 authored by M Lemmon, L Xiaolei Liu, M Qinghao Mao, G NiniContrary to recent accounts of off-balance-sheet securitization by financial firms, we show that asset securitization by nonfinancial firms provides a valuable form of financing for shareholders without harming debtholders. Using data from firms’ SEC filings, we find that securitization is attractive to firms in the middle of the credit quality distribution, which are the firms with the most to gain. Upon initiation, firms experience positive abnormal stock returns and zero abnormal bond returns, and largely use the securitization proceeds to repay existing debt. Securitization minimizes financing costs by reducing expected bankruptcy costs and providing access to segmented credit markets.
History
Journal
The journal of financeVolume
69Issue
4Pagination
1787 - 1825Publisher
John Wiley & SonsLocation
Chichester, Eng.Publisher DOI
ISSN
0022-1082Language
engPublication classification
C1.1 Refereed article in a scholarly journal; C Journal articleCopyright notice
2014, The American Finance AssociationUsage metrics
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