IDEAS home Printed from https://ideas.repec.org/a/cup/jfinqa/v14y1979i04p669-669_00.html
   My bibliography  Save this article

Abstract: Optimal Investment Financing Decisions and the Value of Confidentiality

Author

Listed:
  • Campbell, Tim S.

Abstract

This paper presents a new explanation for the use of debt financing, particularly private debt, in addition to equity without relying on the existence of taxes or bankruptcy costs. The paper assumes that information about returns on investment projects is costly and subject to efficient specialization, so that managers of firms develop inside information not possessed by the market. Suppose the manager of a firm possesses such inside information about a new investment project and his objective is to act in the best interests of existing equity owners. If the information can be disclosed to the market without impairing the value of the project, he will do so. However, much information will be of a strategic nature where the value of the project depends upon confidentiality. Public financing of such projects without disclosing the information will mean that the excess value or surprise monopoly profits in the new project will be split between new and old owners.

Suggested Citation

  • Campbell, Tim S., 1979. "Abstract: Optimal Investment Financing Decisions and the Value of Confidentiality," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 14(4), pages 669-669, November.
    • Handle: RePEc:cup:jfinqa:v:14:y:1979:i:04:p:669-669_00
    as

    Download full text from publisher

    File URL: https://www.cambridge.org/core/product/identifier/S0022109000005627/type/journal_article
    File Function: link to article abstract page
    Download Restriction: no
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cup:jfinqa:v:14:y:1979:i:04:p:669-669_00. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Kirk Stebbing (email available below). General contact details of provider: https://www.cambridge.org/jfq .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.