Collateral registrations and debt/equity
finance∗
Yoshinobu Zasu†
Faculty of Economics, Kansai University
keywords: inside collateral, collateralization of the future assets, innovation,
Abstract
This paper investigates the capital structure under the different collateral registration systems. This paper incorporates one of the characteristic on collateralof Uniform Commercial Code, where the future assets can be collateralized, into
a corporate finance model and considers the effect of the collateralization on the
incentive of innovation. We show the importance of the collateral institution for
innovation through the corporate finance. The incentive for high value productunder the institution that allows to register the future assets as well as the existing
assets is higher than that under the institution that can register only the existing
assets through the complementary effect.

1

Introduction

Innovation is an important driving force to promote economic growth anddevelopment. The innovative entrepreneurs try to develop new products
or technology. External finance helps to promote innovation through entrepreneurship. Institutions regarding collateral are one of the fundamental
property rights to support corporate finance, although intellectual property∗†

incomplete, any comments are welcome.
zasu@kansai-u.ac.jp

1

2 The basic model2

law is important to promote innovation. This paper shows that the legal
institution on inside collateral can encourage innovation through corporate
finance.
What assets can be collateralized is decided by the law outside the private
contract, that is, it is determined as property rights, and the parties cannot
decide it. The contents of legal institutions regarding collateral have a great
influence on the parties’ activities through the credit contract.
Some authors study inside collateral (Niinimaki (2009) and Wang (2010)),but most of the research on collateral are related to the analysis of outside collateral (Besley, Burchardi and Ghatak (2012), Manove, Padilla andPagano (2001) and Niinimaki (2009)). We are considering the effect of inside collateral on incentives of the entrepreneurs and investors. As far as
we know, there is little studies where explicitly analyze collateralizing of
the future assets, although the US institution, Uniform Commercial Code
(UCC), permits to collateralize the future assets.
In reality, there is legal difference on (inside) collateral among the countries. One is the institution that not to permit securitization of the future
assets, and the other is to permit. We examine the effects of legal differencewith regard to collateral on R&D or development of intellectual property.

2

The basic model

We study contracting between entrepreneurs (business owners) and funders(investors), and use a standard agency model that is often used to analyze
corporate finance, where the entrepreneur’s effort is not verifiable and is asource of moral hazard. In order to focus on inside collateral, it is assumed
that the entrepreneur has no wealth for simplicity and cannot pledge her
own assets as outside collateral. The entrepreneur has a unique idea for the2 The basic model3

business and takes R&D to achieve the idea. She needs external credit fromfunder(s) because of no wealth. The funders have money but no idea forbusiness.
The borrower tries to develop a new product or intellectual property z
and need investment of R&D for z. She has no her own wealth and his
company has no cash to invest, thus he needs lenders. The borrower makes
an effort a, where 0 ≤ a ≤ ā, and at probability a a new intellectual propertyz is developed. The effort a is unobservable for the lender and unverifiable,
therefore is not contractable on a. The effort a needs the cost d(a) for her,
where d(a) is increasing and convex function of a.
The borrower has asset x as his company asset, which exists at the time of
the contract. This is used as (inside) collateral. If the entrepreneur develops
a new intellectual property or new product z successfully and the businessis in success, and then she can receive yz as the cash flow of the successful
business. This cash flow includes business sales by using both x and z. If
she fails to develop z but the business is still successful and generates cash
flow, he gets y as the cash flow by using only x. That is, there can be in
failure of the business even when the R&D is successful, and there can bein success of the business even when the R&D fails.
There are two type of investors; the one is the lender for debt finance D
and the other is the the investor for equity finance E. The total amount ofinvestment I for R&D is the sum of debt and equity finance; I = D + E.
The marginal cost of investment for the investors is assumed to be γ bothfor debt and equity finance. The investment I makes effect on the value ofthe new product z; thus the cash flow yz (I) and the value of collateral vz (I)depend on the investment I. yz (I) and vz (I) are increasing and concave
functions of I.

2 The basic model

4

Assume that the entrepreneur makes a take-it-or-leave-it offer to thefunders. The timeline of the model is the following.
1. The borrower and funders sign up credit contracts; debt contract
and/or equity contract. Debt contract consists of (R, D, C), where
R is the repayment for debt, C is the secured assets for the lender incase of default. Equity contract consists of (Rs , Rf , E), where Rs is
dividend in case of success of both R&D and business and Rf is thestock value in case of failure of R&D and success of business.
2. The entrepreneur makes effort a to develop a new product z.
3. The entrepreneur acquires a new product z if the R&D is successful
or do business by using the existing assets x if the R&D is failed.
4. It is verifiable whether the business is successful (the entrepreneur
obtains the cash flow) or failed (the entrepreneur obtains no cash flow).
Given the success of business, she obtains cash flow yz + y in successof R&D, and obtains cash flow y in failure of R&D. The entrepreneur
pays R and/or (Rs , Rf ), which depends on the state. In case of failureof the business, The lender collects assets C as collateral.
In this paper, we focus on the effect of the payment conditions between
debt and credit financing. We assume that debt and credit finance in thispaper as follows:
Debt the payment of debt depends on whether the cash flow is generated or
not (the business is in success or failure). If the entrepreneur obtains
the cash flow from the business, then the lender acquires the payment
R. If the business is in default, then the lender acquires the collateral
C that was set at the contract. Note that the content of collateral C
depends on the collateral registration system: C ∈ {z + x, x}.

2 The basic model

5

Equity the payment of equity depends on whether the new product z is
generated or not (the R&D is in success or failure). Given the successof business, the investor obtains Rs + Rf as dividend and capital gain
when R&D is successful, and obtains only Rf when R&D is in failure.
Therefore, Rs is additional value in successful R&D. When the businessis in default, no payment go to the investor of equity.
We summarize the payment or transfers of debt and equity finance inTable1.
Tab. 1: payments or transfers (as debt or equity)
R&D / business success failure
success(R, Rs ) (C, 0)
failure(R, Rf ) (C, 0)
Let us consider the generic registration first, where the future assets areallowed as collateral; C = x+z. In Comparison between the registrations, we
examine the specific registration, where only the existing assets are allowed
as collateral; C = x.
The payoff of the entrepreneur is defined as:
π = p × [a × {yz (I) + y − Rs − Rf − R} + (1 − a) × {y − Rf − R}] − d(a)= p[a{yz (I) − Rs } + y − Rf − R] − d(a),(1)

where p is the probability of success of business.
From the first order condition of (1), incentive compatibility constraint(ICC) is as:
p[yz − Rs ] = d′ (a)(2)

We see that this condition does not depend on the repayment R of debt

2 The basic model

6

finance.
In the case of that each investor provides debt finance and equity finance,
the Non-Profit Constraints (NPCs) are
p × [a × Rs + (1 − a) × Rf ] − γE = 0
for equity finance andp × R + (1 − p) × [a × (vz + v) + (1 − a) × v] − γD = 0
for debt finance, respectively. We assume that the opportunity costs forboth equity and debt finance have the same value γ, for simplicity.
Before proceeding the analysis, we make the three assumptions; assumptions about other institutions, inside collateral, and legal difference on collateral registration. We focus on the difference in the ways of registration ofcollateral. It is assumed firstly that other legal institutions, such as foreclosure, reorganization, or liquidation, and the level of enforcement are given,though theses institutions also influence on corporate finance. Therefore,
other (institutional) things being equal, we provide comparative analysis on
institution of collateral registration.
Secondly, to make the analysis of inside collateral meaningful, we assume
that a creditor shares the claim with “other creditors” related for the business in default when there are not enough assets to satisfy all of the debt,
and then the creditor can fully collect debt if she registers the firm assets as
collateral, although any business-related creditors have the right to acquire
the firm’s remaining assets to collect the debt in the case of default. By
this assumption, the entrepreneur pledges the full inside (business) assets as
collateral as much as possible because such full collateralization makes her

2 The basic model

7

better off.
Finally, we mention two types of legal registration on collateral; “generic”
approach and “specific” one. Although there are other different characteristics between the generic and specific approaches1 , this paper focuses onwhether the future assets can be collateralized or not. On the one hand, alegal institution requires that the corporate assets must be registered “specifically.” This kind of rule is closely related to the civil law countries such as
Germany and Japan.2 In such countries, they can register only “specified”
asset as collateral. Specific registration in this paper indicates that the assets must be specified to be registered as collateral. That is, it is impossible
to collateralize the future corporate assets, which are not specified at thetime of contract, as collateral under the specific approach. On the other
hand, in the generic registration, we keep Article 9 of UCC in mind. We can“generically” register the corporate assets under this institution. Genericregistration in this paper means that it is possible to registrar the future
assets as collateral as well as the existing asset.
In addition, we assume the following technical assumptions as the second
order conditions in the second best:d′′ (a) + θd′′′ (a) > 0 and(3)(−d′′ (a)) × (p{ayz′′ (I)} + (1 − p){avz′′ (I)}) − (pyz′ (I) + (1 − p)vz′ (I))2 > 0,(4)where θ is the Lagrange multiplier for the ICC.
1

See Armour (2008).
In the specific registration, we keep civil law countries such as Germany and Japan
in mind. In such countries, they employs the following as fundamental principles: theprinciples of Specificity, certainty and public disclosure. See Reimann and Zekoll (2005)
and Foster and Sule (2010) in German law, and .... in Japanese law.
2

2 The basic model

2.1

8

BenchmarkWe shall examine the first best outcome as benchmark in this subsection.
Social welfare which summarizes the payoffs of the entrepreneur and funders
in this model is as:
p×[a × (yz + y) + (1 − a) × y] − d(a)+ (1 − p)[a × (vz + v) + (1 − a) × v] − γI(5)We get the first best conditions as first order conditions of (5) regarding(a, I):
pyz + (1 − p)vz = d′ (a)(6)

p[avz′ (I)] + (1 − p)[avz′ (I)] = γ(7)The level of R&D effort and investment satisfying both (6) and (7) is definedas (aF , I F ). (aF , I F ) are complementary inputs in this setting.
Now we consider the hypothetical situation where the one investor can
provide the continent claims (Rz , Rx , C), where Rz and Rx are contingent
claims when z occurs or not, respectively, and C is claim in default, that iscollateral.
The problem of the entrepreneur in the one investor case is as:

max π

Rz ,Rx ,a,I

subject to

NPC and ICC

2 The basic model9

the NPC under contingent claims is defined as:
p[a(Rz ) + (1 − a)Rx ]+ (1 − p)[a(vz + v) + (1 − a)v] − γI = 0,
where γ is the opportunity cost of investment.
The ICC under contingent claims is defined as:p(yz − Rz + Rx ) = d′ (a)By substituting the NPC into π, we obtain the modified optimal contracting problem:
max p[ayz (I) + y] + (1 − p)[avz (I) + v] − d(a) − γIa,Isubject to

ICC.

The first order conditions is as:
pyz + (1 − p)vz = d′ (a)(8)

p[avz′ (I) + v ′ (I)] + (1 − p)[avz′ (I) + v ′ (I)] = γ(9)(a, I) satisfying the above equations is the same as (aF , I F ). Therefore, if
we allow that one investor can provide the contingent claims, the first best
outcome is achieved.

2 The basic model

2.2

10

Debt/Equity finance

Now let us consider the case where the one funder provides debt financeand the other funder provides equity finance. When the entrepreneur use
two class of financing including debt and equity finance, the entrepreneur’s
problem ismax

Rs ,Rf ,R,D,E,a

subject toπ
NPC for debt, NPC for equity, ICC,

y − R − Rf ≥ 0
and I = D + E,
where the condition y − R − Rf ≥ 0 is feasibility constraint (FC) when R&D
is in failure but cash flow is still generated.
We classify two cases: one is the equilibrium only with debt finance, andthe other is the equilibrium with both debt and equity finance dependingon the project value. We have the optimal contract as the following:
Proposition 1. Suppose that the project value is sufficiently small. Thenthe entrepreneur uses only debt finance as external finance; I ∗ = D∗ , E ∗ = 0.
The Feasibility constraint (FC) is not binding; y − R∗ > 0.
The R&D effort a∗ and investment I ∗ = D∗ satisfy the following equations:pyz (I) + (1 − p)vz (I) = d′ (a∗ ) + θd′′ (a∗ )(10)p(ayz′ (I)) + (1 − p)(avz′ (I)) + θpyz′ (I) = γ.

(11)

Proposition 1 indicates that if the entrepreneur can access both debt
and credit finance, she uses debt finance first. This is because Marginal2 The basic model

11

cost of equity finance λ∗2 γ is higher than Marginal cost (MC) of debt financeγ, where λ∗2 > 1 is the Lagrange multiplier for the non-profit constraint of
the equity finance. That is, debt finance is more cost effective as externalfinance than equity finance when the FC is not binding.
As the project value increases, the amount of debt finance increases tothe point that the FC is binding, i.e., y = R∗ . At this point, the additional
debt finance cannot be used more. Then, the entrepreneur requires equity
finance as further fund. Given the D at the point, the use of equity E leads
to the total amount of investment I because of I = D + E, and resultsin that the entrepreneur can reduce the payment R to satisfy the NPC for
debt and can increase the amount of debt further. Therefore, the maximum
amount of debt is relaxed by the introduction of equity finance. Because of
y = R∗ , Rf∗ = 0 when the equity finance is used.
The following result is the equilibrium with both debt and credit finance.
Proposition 2. Suppose that the project value is sufficiently large. Then theentrepreneur uses equity finance in addition to debt finance; I ∗ = D∗ + E ∗ .
The Feasibility constraint is binding; y = R∗ , and Rf∗ = 0.
The R&D effort a∗ , debt D∗ and equity E ∗ satisfies the following equations:pyz (I ∗ ) + λ∗1 (1 − p)vz (I ∗ ) = d′ (a∗ ) + θ∗ d′′ (a∗ ),py + (1 − p){avz (I ∗ ) + v} = γD∗ ,

(12)

and

(13)

payz′ (I ∗ ) + λ1 (1 − p)avz′ (I ∗ ) + θpyz′ (I ∗ ) = λ2 γ,(14)where I ∗ = D∗ + E ∗ , λ∗1 > 1 and θ∗ > 0.

3 Comparison

3

12Comparison

So far, we have analyzed given the generic registration. This section compare
the specific registration with the generic registration, and considers the effectof each registration on debt and equity finance.
Under the specific registration, only the existing asset is collateralized,
i.e., C = x. As is the case with the generic registration in the preceding
section, the case is divided into the two equilibria depending on the projectvalue, that is, one is the equilibrium only with debt finance and the other isthe equilibrium with both debt and equity finance. We summarize that as
the proposition:
Proposition 3. i) Suppose that the project value is sufficiently small. Thenthe entrepreneur uses only debt finance as external finance; I ∗ = D∗ , E ∗ = 0.
The Feasibility constraint (FC) is not binding; y − R∗ > 0.
The R&D effort a∗ and investment I ∗ = D∗ satisfy the following equations:pyz (I) = d′ (a∗ ) + θd′′ (a∗ )(15)p(ayz′ (I)) + θpyz′ (I) = γ.

(16)ii) Suppose that the project value is sufficiently large. Then the entrepreneur uses equity finance in addition to debt finance; I ∗ = D∗ + E ∗ .
The Feasibility constraint is binding; y = R∗ , and Rf∗ = 0.
The R&D effort a∗ , debt D∗ and equity E ∗ satisfies the following equa-4 Concluding remarks

13

tions:pyz (I ∗ ) = d′ (a∗ ) + θ∗ d′′ (a∗ ),py + (1 − p)v = γD∗ ,

(17)

and

(18)

payz′ (I ∗ ) + θpyz′ (I ∗ ) = λ2 γ,(19)where I ∗ = D∗ + E ∗ , λ2 and θ∗ > 0.
We summarize the relationship between the project value and capital
structure under each registration.
Fig. 1: project value and capital structure
Investment
G typeS typeequityD̄G<latexit sha1_base64="sBBzS2DGV9NZUl8mh+Sw0zPVwGs=">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</latexit>

equity<latexit sha1_base64="MUrWeVVUp+69xcqaDQbJbcHDXfc=">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</latexit>

D̄S
debt
debt
Project value

V1<latexit sha1_base64="bXToVHNBL8Ye5lv7yMINi0cP8Jg=">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</latexit>

4

V2<latexit sha1_base64="9ZRvd590vPov8aCj4MJXPobGKOw=">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</latexit>

V3<latexit sha1_base64="uRf792jzd5NjhRe2LpmhDEgocoo=">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</latexit>

V4<latexit sha1_base64="9Z8BCEJtXY5voYCjT3zzu63Zk1w=">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</latexit>

Concluding remarks

We compare the inside collateral institutions between the specific and genericregistrations, and examine the effect of the legal difference on incentives
through the credit contracts. The specific registration, which allows thecreditors to secure only the existing asset of the business, provides relatively
little incentive to develop new product, and this problem deteriorates espe-

4 Concluding remarks

14

cially in the potential high value project. The generic registration, whichallows the creditors to secure the future assets as well as the existing asset, gives the entrepreneur relatively high incentive for R&D through thecomplementary effect.

References
Armour, John, “The Law and Economics Debate About Secured Lending:Lessons for European Lawmaking?,” European Company and Financial
Law Review, 2008, Vol. 5.
Besley, Timothy J., Konrad B. Burchardi, and Maitreesh Ghatak,“Incentives and the de Soto Effect,” Quarterly Journal of Economics,
2012, 127,, 237–282.
Foster, Nigel G and Satish Sule, German legal system and laws, 4thedition, Oxford University Press, USA, 2010.
Manove, Michael, A Jorge Padilla, and Marco Pagano, “Collateralversus Project Screening: A Model of Lazy Banks,” Rand Journal of
Economics, 2001, pp. 726–744.
Niinimaki, J. P., “Does Collateral Fuel Moral Hazard in Banking?,” Journal of Banking and Finance, 2009, 33 (3), 514–521.
Reimann, Mathias and Joachim Zekoll, Introduction to German law,
2nd Edition, Kluwer Law International, 2005.
Wang, Yu-Lin, “Does collateral cause inefficient resource allocation?,”
Journal of economics and business, 2010, 62 (3), 220–233.