• Login
    View Item 
    •   Home
    • Yale Law School Journals
    • Yale Journal on Regulation
    • View Item
    •   Home
    • Yale Law School Journals
    • Yale Journal on Regulation
    • View Item
    JavaScript is disabled for your browser. Some features of this site may not work without it.

    Browse

    All of openYLSCommunitiesPublication DateAuthorsTitlesSubjectsThis CollectionPublication DateAuthorsTitlesSubjects

    My Account

    LoginRegister

    Statistics

    Display statistics

    Agency Costs and the Demand and Supply of Secured Debt and Asset Securitization

    • CSV
    • RefMan
    • EndNote
    • BibTex
    • RefWorks
    Thumbnail
    Name:
    12_19YaleJonReg413_2002_.pdf
    Size:
    3.273Mb
    Format:
    PDF
    Download
    Author
    Ngo, Minh
    
    Metadata
    Show full item record
    URI
    http://hdl.handle.net/20.500.13051/8009
    Abstract
    Current accounts of the demand and supply of secured debt and asset securitization are in stark contrast with observed debtor behavior. Whereas current theories predict a strong preference for secured debt, debtors borrow on an unsecured basis whenever possible. In addition, the purported theoretical similarities between secured debt and asset securitization, that both forms of financing generate savings by pledging collateral, conflict with the significant disparity in the popularity and signals associated with use of asset securitization and secured debt. 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 offinancing is the radically different way in which secured debt and asset securitization attempt to decrease the likelihood of debtor insolvency. Focusing on this crucial difference explains the disparity in popularity between the forms of financing by suggesting that secured debt is ideally suited for financially marginal debtors but ill-suited for financially healthy debtors. Introduction
    Collections
    Yale Journal on Regulation

    entitlement

     
    DSpace software (copyright © 2002 - 2025)  DuraSpace
    Quick Guide | Contact Us
    Open Repository is a service operated by 
    Atmire NV
     

    Export search results

    The export option will allow you to export the current search results of the entered query to a file. Different formats are available for download. To export the items, click on the button corresponding with the preferred download format.

    By default, clicking on the export buttons will result in a download of the allowed maximum amount of items.

    To select a subset of the search results, click "Selective Export" button and make a selection of the items you want to export. The amount of items that can be exported at once is similarly restricted as the full export.

    After making a selection, click one of the export format buttons. The amount of items that will be exported is indicated in the bubble next to export format.