The Market’s View on Accounting Classifications for Asset Securitizations

Minkwan Ahn ()
Additional contact information
Minkwan Ahn: SKK Business School, Sungkyunkwan University, Seoul 03063, Republic of Korea

IJFS, 2023, vol. 11, issue 3, 1-19

Abstract: Prior research has examined how investors view asset securitizations, and shows that investors treat securitizations as borrowings, even when GAAP treats them as sales. Upon the adoption of two new accounting standards relating to securitizations, some off-balance-sheet securitized assets were consolidated back onto firms’ balance sheets. This study investigated how investors viewed assets that firms consolidated under the new standards and those that firms left unconsolidated. I found that investors differentiated between these two types of securitizations, treating the consolidated assets as borrowings and the unconsolidated assets as sales. I conclude that the new accounting standards are more consistent with equity investors’ views of securitizations. I also found that, for the consolidated assets, investors did not distinguish between securitizations going through two different accounting structures. Lastly, this study provides evidence on one information channel that investors use to distinguish between securitizations that may have the economic substance of borrowings versus sales.

Keywords: securitization; bank; retained interest; implicit recourse; risk; bank regulation (search for similar items in EconPapers)
JEL-codes: F2 F3 F41 F42 G1 G2 G3 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.mdpi.com/2227-7072/11/3/91/pdf (application/pdf)
https://www.mdpi.com/2227-7072/11/3/91/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jijfss:v:11:y:2023:i:3:p:91-:d:1191539

Access Statistics for this article

IJFS is currently edited by Ms. Hannah Lu

More articles in IJFS from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().