Abstract

http://ssrn.com/abstract=2179088
 
 

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Market and Regional Segmentation and Risk Premia in the First Era of Financial Globalization


David Chambers


University of Cambridge - Judge Business School, Department of Finance & Accounting

Sergei Sarkissian


McGill University; Yerevan State University

Michael J. Schill


University of Virginia – Darden Graduate School of Business Administration

June 18, 2015

Darden Business School Working Paper No. 2179088

Abstract:     
We study financing effects of U.S. railroad investments through active issuance of London-listed bonds in 1870-1913. This setting provides a natural experiment to analyze cross-listing benefits due to the geography-specific nature of railroad assets and the precision of cost of capital gains attributable to bond yields. The market segmentation premium is over 80bps in the 1870s, yet declines to almost zero by the 1910s, consistent with markets becoming integrated. The cross-listing significance for borrowing costs and financing constraints is lower for railroads from remote areas. We provide novel evidence on the importance of geography-induced information costs for global financial opportunities.

Number of Pages in PDF File: 53

Keywords: Bond cross-listing, Equity cross-listing, Bond yield, Return on assets

JEL Classification: F36, G15, G30, O16


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Date posted: November 23, 2012 ; Last revised: July 14, 2015

Suggested Citation

Chambers, David and Sarkissian, Sergei and Schill, Michael J., Market and Regional Segmentation and Risk Premia in the First Era of Financial Globalization (June 18, 2015). Darden Business School Working Paper No. 2179088. Available at SSRN: http://ssrn.com/abstract=2179088 or http://dx.doi.org/10.2139/ssrn.2179088

Contact Information

David Chambers (Contact Author)
University of Cambridge - Judge Business School, Department of Finance & Accounting ( email )
Trumpington Street
Cambridge, CB2 1AG
United Kingdom
44 (0)1223 339700 (Phone)
Sergei Sarkissian
McGill University ( email )
1001 Sherbrooke St. W
Montreal, Quebec H3A 1G5
Canada
514-398-4876 (Phone)
514-398-3876 (Fax)
Yerevan State University
1 Alex Manoogian Street
Yerevan, 0025
Armenia
Michael J. Schill
University of Virginia – Darden Graduate School of Business Administration ( email )
P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-4071 (Phone)
434-243-7676 (Fax)
HOME PAGE: http://www.darden.virginia.edu/faculty/schill.htm
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