Finanzinnovationen der Fremdfinanzierung

The pace of innovation in financial instruments has been enormous over the last two dec-ades, but only a few of them have survived. Several papers deal with the valuation of existing financialproducts. In contrast, our approach tries to explain the use of certain financial innovations by theirfulfillment of different corporate financing functions. First, we identify numerous basic components offinancial instruments as this has already been suggested in Breuer (2002). Afterwards, the issue ofselected debt securities is discussed with respect to possible financing functions. The comparison ofour results with actual market success of these instruments leads us to the conclusion that tax reasonsare not that decisive for the lasting relevance of new financial products. Rather, it seems that otherfinancing functions as signaling private information and regulating management’s behavior play em-pirically a more significant role as well.