The investment decision process and the role of asset specificity.
In this paper, research has been done on the investment decision process of investors. Previous research mostly focuses on how firms make decisions about the composition of the capital structure in perfect markets. This research takes a different perspective by focusing on the decision process of investors. The research has been conducted through qualitative research. Six different types of debt investors have been interviewed. From these interviews it became clear that concepts like trust, diversification and sustainability play an important role in the investment decision process. Furthermore, the role of asset specificity in the investment decision process has been investigated. Asset specificity is an example of a concept in an imperfect market. It is the degree to which the value of a certain good is higher in a certain contractual relationship than outside this relationship. It turns out that this concept is not as important as the other concepts, but that it does play a role in the background of the investment decision process. The presence of asset specificity will reflect itself in the rating of the investment opportunity and the expected return.
Faculteit der Managementwetenschappen