The Costs, Wealth Effects and Determinants of International Capital Raising: Evidence from Public Yankee Bonds

44 Pages Posted: 18 Feb 2000

See all articles by Darius P. Miller

Darius P. Miller

Southern Methodist University (SMU) - Finance Department

John Puthenpurackal

University of Nevada, Las Vegas - Department of Finance

Multiple version iconThere are 2 versions of this paper

Date Written: October 2001

Abstract

This paper examines the costs, wealth effects, and determinants of international capital raising for a sample of 260 public debt issues made by non-U.S. firms in the U.S. (Yankee) market. We find that investors demand economically significant premiums on bonds issued by firms that are located in countries that do not protect investors' rights and do not have a prior history of on-going disclosure. The results provide support for the literature that suggests better legal protections and more detailed information disclosure increases the price investors will pay for financial assets. We also find that the average stock price reaction to Yankee bond offerings is significantly positive and that abnormal returns are largest for first-time Yankee bond issuers. In addition, we show that foreign firms tend to issue in the Yankee market when the relative interest cost is low, indicating that potential differences in borrowing costs influence where firms choose to sell bonds.

Note: Previously titled: The Costs, Determinants, and Wealth Effects of Public Yankee Bond Offerings

Keywords: Yankee bonds, International Capital Raising

JEL Classification: F3

Suggested Citation

Miller, Darius P. and Puthenpurackal, John, The Costs, Wealth Effects and Determinants of International Capital Raising: Evidence from Public Yankee Bonds (October 2001). Available at SSRN: https://ssrn.com/abstract=199108 or http://dx.doi.org/10.2139/ssrn.199108

Darius P. Miller (Contact Author)

Southern Methodist University (SMU) - Finance Department ( email )

United States

John Puthenpurackal

University of Nevada, Las Vegas - Department of Finance ( email )

4505 S. Maryland Parkway
Box 456008
Las Vegas, NV 89154-6008
United States

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