부산대학교 도서관

Byline: JUSTIN MURFIN, RYAN PRATT ABSTRACT We propose that, by financing their own product sales through captive finance subsidiaries, durable goods manufacturers commit to higher resale values for their products in future periods. Using data on captive financing by the manufacturers of heavy equipment, we find that captive-backed models have lower price depreciation. The evidence is consistent with captive finance helping manufacturers commit to ex-post actions that support used machine prices. This, in turn, conveys higher pledgeability for captive-backed products, even for individual machines financed by banks. Although motivated as a rent-seeking device, captive financing generates positive spillovers by relaxing credit constraints. Article Note: Justin Murfin is with Cornell. Ryan Pratt is with Brigham Young University. This paper was formerly entitled 'Captive Finance and the Coase Conjecture.' We thank the Editor, Bruno Biais, as well as an anonymous Associate Editor and two anonymous referees for helpful comments. We also thank Jean-Noel Barrot, Tanakorn Makaew, Rich Matthews, Ralf Meisenzahl, Rodney Ramcharan, Adriano Rampini, seminar participants at Yale School of Management, BYU economics and finance departments, Southern Methodist University, University of Rochester, Ohio State, Drexel, Tulane, University of Colorado, University of Pittsburgh, University of Illinois, Federal Reserve Bank of Philadelphia, Dartmouth Tuck, MIT Sloan, Temple University, University of South Carolina, and conference participants at Red Rock Finance Conference, Olin Corporate Finance Conference, Financial Research Association Annual Meeting, Northern Finance Association Conference, and American Finance Association Annual Meeting. We have read the Journal of Finance's disclosure policy and have no conflicts of interest to disclose. CAPTION(S): Appendix S1: Internet Appendix.