Debt Securities in Private Firms: Types, Institutions and Performance in 25 Countries

Cumming, Douglas J.; Fleming, Grant

doi:10.2139/ssrn.1934349

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Debt Securities in Private Firms: Types, Institutions and Performance in 25 Countries

39 Pages Posted: 29 Sep 2011 Last revised: 24 Jan 2012

See all articles by Douglas J. Cumming

Douglas J. Cumming

Florida Atlantic University; Birmingham Business School; European Corporate Governance Institute (ECGI)

Grant Fleming

Continuity Capital Partners

Date Written: September 27, 2011

Abstract

We document the types of private debt securities used by private firms across 25 countries over 2001-2010. Returns to private debt depend on lender (fund manager) characteristics, particularly portfolio size per manager, highlighting the role of time allocation for due diligence and monitoring. Also, returns to private debt are significantly related to borrower (firm-specific) risk. By contrast, market conditions such as TED spreads and country level legal factors such as creditor rights are insignificantly or, at most, weakly related to the returns to private debt. Market and legal conditions are nevertheless significantly related to private debt investment volumes and location.

Keywords: Private debt, Contracts, Performance, Law and finance

JEL Classification: G23, G24

Suggested Citation: Suggested Citation

Cumming, Douglas J. and Fleming, Grant Alan, Debt Securities in Private Firms: Types, Institutions and Performance in 25 Countries (September 27, 2011). Available at SSRN: https://ssrn.com/abstract=1934349 or http://dx.doi.org/10.2139/ssrn.1934349