Determinants of asset securitization by non-financial French listed companies

This study aimed to examine the determinants of asset securitization in the French context, with particular attention to corporate governance, stock-option incentive and financing constraints. Using panel data comprising 400 firm-year observations from 80 non-financial companies listed on the CAC index over the period 2019-2023, the study found that non-financial French listed companies primarily used asset securitization as an earnings management tool driven by stock option- based compensation, rather than an alternative source of debt financing. Moreover, strong corporate governance mechanisms, including managerial ownership, board independence, institutional investor representation on the board and CEO duality, were associated with a lower use of asset securitization. This study makes three key contributions. First, unlike previous research that used a binary measure, this study operationalized asset securitization using a continuous measure: the “Securitization ratio”. Second, whereas most previous studies focused on the banking industry, the study extended the investigation to non-financial firms, where securitization becomes increasingly relevant. Thirdly, while most previous studies largely investigated in the United States context, this study provides the first evidence from the French context that can be considered as an interesting field to examine asset securitization because of its specific corporate governance system and accounting regulation.