The Accounting Review Vol. 83 No. 5 2008
Are Asset Securitizations Sales or Loans?
Abstract
This study addresses whether asset securitizations are really asset sales or a form of secured borrowing, by estimating cross-sectional equity valuation regressions to assess whether the stock market treats securitized assets and liabilities held by a special purpose entity (SPE) as assets and liabilities of the sponsor-originator (S-O). Although all sample firms account for asset securitizations as sales, we find that the market views such SPE assets and liabilities as belonging to the S-O, i.e., the risk and rewards of ownership of the transferred assets reside with the S-O and not the SPE. Our findings are consistent with the explanation that sale-based asset securitizations enable SPE bondholders to retain priority in bankruptcy of the S-O while also enabling the S-O to obtain lower borrowing costs by implicitly guaranteeing the SPE’s debt.
- DOI
- 10.2308/accr.2008.83.5.1251
- Volume
- 83
- Issue
- 5
- Pages
- 1251-1272
- Language
- en
- Sources
- openalex bibtex:phds-export.bib crossref