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Collateral and capital structure

Publication ,  Journal Article
Rampini, AA; Viswanathan, S
Published in: Journal of Financial Economics
August 1, 2013

We develop a dynamic model of investment, capital structure, leasing, and risk management based on firms' need to collateralize promises to pay with tangible assets. Both financing and risk management involve promises to pay subject to collateral constraints. Leasing is strongly collateralized costly financing and permits greater leverage. More constrained firms hedge less and lease more, both cross-sectionally and dynamically. Mature firms suffering adverse cash flow shocks may cut risk management and sell and lease back assets. Persistence of productivity reduces the benefits to hedging low cash flows and can lead firms not to hedge at all. © 2013 Elsevier B.V.

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Published In

Journal of Financial Economics

DOI

ISSN

0304-405X

Publication Date

August 1, 2013

Volume

109

Issue

2

Start / End Page

466 / 492

Related Subject Headings

  • Finance
  • 3801 Applied economics
  • 3502 Banking, finance and investment
  • 1606 Political Science
  • 1502 Banking, Finance and Investment
  • 1402 Applied Economics
 

Citation

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Rampini, A. A., & Viswanathan, S. (2013). Collateral and capital structure. Journal of Financial Economics, 109(2), 466–492. https://doi.org/10.1016/j.jfineco.2013.03.002
Rampini, A. A., and S. Viswanathan. “Collateral and capital structure.” Journal of Financial Economics 109, no. 2 (August 1, 2013): 466–92. https://doi.org/10.1016/j.jfineco.2013.03.002.
Rampini AA, Viswanathan S. Collateral and capital structure. Journal of Financial Economics. 2013 Aug 1;109(2):466–92.
Rampini, A. A., and S. Viswanathan. “Collateral and capital structure.” Journal of Financial Economics, vol. 109, no. 2, Aug. 2013, pp. 466–92. Scopus, doi:10.1016/j.jfineco.2013.03.002.
Rampini AA, Viswanathan S. Collateral and capital structure. Journal of Financial Economics. 2013 Aug 1;109(2):466–492.
Journal cover image

Published In

Journal of Financial Economics

DOI

ISSN

0304-405X

Publication Date

August 1, 2013

Volume

109

Issue

2

Start / End Page

466 / 492

Related Subject Headings

  • Finance
  • 3801 Applied economics
  • 3502 Banking, finance and investment
  • 1606 Political Science
  • 1502 Banking, Finance and Investment
  • 1402 Applied Economics