Leasing, Ability to Repossess, and Debt Capacity

• 成果类型: Article
• 署名作者: Eisfeldt, Andrea L.; Rampini, Adriano A.
• 署名单位: Duke University; Northwestern University
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhn026
• 发表日期: 2009
• 页码: 1621
• 关键词: ADVERSE-SELECTION; Trade credit; INVESTMENT; MODEL; constraints; valuation; MARKETS; LEASES; tax; substitutes

摘要

This paper studies the financing role of leasing and secured lending. We argue that the benefit of leasing is that repossession of a leased asset is easier than foreclosure on the collateral of a secured loan, which implies that leasing has higher debt capacity than secured lending. However, leasing involves agency costs due to the separation of ownership and control. More financially constrained firms value the additional debt capacity more and hence lease more of their capital than less constrained firms. We provide empirical evidence consistent with this prediction. Our theory is consistent with the explanation of leasing by practitioners, namely that leasing preserves capital, which the academic literature considers a fallacy.