Patterns of International Capital Raisings

Abstract

This paper documents several new patterns associated with firms issuing stocks and bonds in foreign markets that motivate the need for and help guide the direction of future research. Three major patterns stand out. (1) A large and growing fraction of capital raisings, especially debt issuances, occurs in international markets, but a very small number of firms accounts for the bulk of international capital raisings, highlighting the cross-firm heterogeneity in financial globalization. (2) Changes in firm performance following equity and debt issuances in international markets are qualitatively similar to those following domestic issuances, suggesting that capital raisings abroad are not intrinsically different from those in domestic markets. (3) Firms continue to issue securities both abroad and at home after accessing international markets, suggesting that international and domestic markets are complements, not substitutes. Existing theories do not fully account for these patterns.

Signaling Organizational Virtue: an Examination of Virtue Rhetoric, Country‐Level Corruption, and Performance of Foreign IPOs from Emerging and Developed Economies

“…Today the largest component of the international capital market is the bond market (Lau and Yu, ). From 1991 to 2005, 35 percent of all capital raised through debt issues was in markets other than the firm's home market (Gozzi, Levine, and Schmukler, ). Foreign firms raise significantly more debt than equity in the U.S. (Chaplinsky and Ramchand, ) and there is growing evidence suggesting firms experience additional costs when they try to source debt outside of their home market (Fidora, Fratzscher, and Thimann ).…”

Cost of Capital in an International Context: Institutional Distance, Quality, and Dynamics

“…We focus on a downstream sample for theoretical and empirical reasons to achieve the clearest identification of cost of debt effects as possible. Theoretically, systematic differences in the market's pricing of debt for firms from less-developed markets (increased a-priori liability of foreignness, potential positive signaling effects), differences in financing patterns between companies from developed and less-developed countries, and generally differing investment behavior would require consideration of further cost-of debt effects in a bidirectional sample (Gozzi et al, 2010). Such systematic differences would most likely affect the dependencies in our model, would introduce noise into our sample and would imply a transferability of results, which we believe, is unwarranted due to the idiosyncrasies of companies internationalizing from less-developed countries.…”

Does Foreign Portfolio Investment Reach Small Listed Firms?

“…To test H3, a sample of international issuances from SDC Platinum Global New Issues was collected for the same term as the base sample (1996)(1997)(1998)(1999)(2000)(2001)(2002)(2003)(2004)(2005)(2006)(2007). These issuances were identified following the methodology of Gozzi et al (2009). Specifically, international issues were classified as securities issues listed on an exchange in a nation other than the company's domicile nation.…”