Why Study larger Projects? An Introduction to Research on Project Finance
Benjamin C. Esty
Morgan 381, Harvard caper check, Soldiers Field Road, Boston MA 02163, USA e-mail: besty@hbs.edu
view Despite the fact that more than $200 billion of corking investment was payd by means of contrive companies in 2001, an amount that grew at a compound annual rate of almost 20% during the 1990s, there has been very little academic research on project pay. The purpose of this article is to explain why project finance in general and why large projects in particular merit separate academic research and instruction. In short, there are significant opportunities to study the relationship among structural attributes (i.e., high leverage, contractual details, and concentrated equity ownership), managerial incentives, and plus values, as well as improve current coiffe in this rapidly growing field of finance. Keywords: Project finance; capital budgeting; contracting; agency theory; capital mental synthesis; corporate governance JEL classification: G32, G34, L22, G31
1.
Introduction Project finance involves the creation of a legally independent project union financed with equity from one or more sponsoring firms and non-recourse debt for the purpose of investiture in a capital asset.1 Although this definition makes project finance sound esoteric, it is not: total project-financed investment grew at a compound annual rate of almost 20% through most of the 1990s and peaked at $217
Presented at the 2003 Merton H. milling machine Doctoral Seminar, organised by John Doukas at the European Financial Management Association (EFMA) 2003 Annual Meeting, Helsinki, Finland. I would corresponding to thank the Division of Research at Harvard Business School for supporting this research, and John Doukas (the editor), Bill Fruhan, Tom Piper, Rick Ruback, and dick Tufano for comments on an earlier version of this article. 1 There is no...If you requisite to get a full essay, order it on our website: Orderessay
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