Recourse Mortgage Law and Asset Substitution: Evidence from the Housing Bubble

2013 ◽  
Author(s):  
Tong Yob Nam ◽  
Seungjoon Oh
Keyword(s):  
Housing Bubble ◽  
Asset Substitution ◽  
Mortgage Law

Accounting Transparency and the Asset Substitution Problem

2009 ◽  
Vol 84 (3) ◽  
pp. 689-712 ◽  
Author(s):  
Katrin Burkhardt ◽  
Roland Strausz
Keyword(s):  
Substitution Effect ◽  
Cost Accounting ◽  
Asset Substitution ◽  
Historical Cost ◽  
Optimal Capital Structure ◽  
Negative Effect ◽  
Optimal Capital ◽  
Positive Effect ◽  
Historical Cost Accounting ◽  
Debt Levels

ABSTRACT: We develop a model to show that transparent accounting can worsen the asset substitution effect of debt. This negative effect can outweigh the usual positive effect of transparency. We demonstrate this point by comparing pure historical cost accounting to the conservatively skewed accounting regime of lower-of-cost-or-market (LCM). In a market with asymmetric information, the two regimes lead to different degrees of transparency. The more transparent LCM regime produces more efficient results for firms with lower debt levels, while the opaque rule of pure historical cost accounting is preferable for higher debt levels. We explore the implications of this result for the firm's optimal capital structure.

scholarly journals Speculative Fever: Investor Contagion in the Housing Bubble

2016 ◽  
Author(s):  
Patrick J. Bayer ◽  
Kyle Mangum ◽  
James W. Roberts
Keyword(s):  
Housing Bubble
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