Abstract
Existing literature studies the effect of asymmetric information on many aspects of debt financing including debt maturity and seniority, collateral, liquidation rights, convertible debt, income bonds and sinking funds. Less is known about the effect of asymmetric information on firms' incentives to issue non-recourse debt (project financing). This paper is intended to shed new light on this issue. We analyze the choice between project financing and corporate financing when a firm's insiders have private information about the qualities of the firm's investment projects. Different informational structures and the resulting equilibria are considered. Empirical implications including new testable predictions are discussed.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
