Do Non-U.S. Firms Issue Equity on U.S. Stock Exchanges to Relax Capital Constraints?

41 Pages Posted: 23 Feb 2000

See all articles by Karl V. Lins

Karl V. Lins

University of Utah - Department of Finance

Deon Strickland

Arizona State University (ASU) - Finance Department

Marc Zenner

Citigroup, Inc. - Investment Banking Division

Date Written: April 2000

Abstract

The number of non-U.S. firms listing their equity on U.S. stock exchanges has increased dramatically. While non-U.S. firms may seek U.S. listings for a variety of reasons, we focus on one often-mentioned motive, namely, that a U.S. listing enhances access to external capital markets. We document that the sensitivity of investment to cash flow decreases significantly for firms from emerging capital markets, but does not change for developed markets firms following a U.S. listing. A large proportion of the listing firms from both emerging and developed markets explicitly state the importance of access to external capital markets in their annual reports, but emerging market firms mention this need more frequently. Further, we find that firms access international capital markets more often following a U.S. listing and, consistent with our other results, this increase is more pronounced for firms from emerging markets. Overall, our findings suggest that greater access to external capital markets is an important benefit of a U.S. stock market listing, especially for emerging market firms.

JEL Classification: K00

Suggested Citation

Lins, Karl V. and Strickland, Deon and Zenner, Marc, Do Non-U.S. Firms Issue Equity on U.S. Stock Exchanges to Relax Capital Constraints? (April 2000). AFA 2001 New Orleans. Available at SSRN: https://ssrn.com/abstract=206288 or http://dx.doi.org/10.2139/ssrn.206288

Karl V. Lins

University of Utah - Department of Finance ( email )

David Eccles School of Business
Salt Lake City, UT 84112
United States
801-585-3171 (Phone)
801-581-7214 (Fax)

Deon Strickland

Arizona State University (ASU) - Finance Department ( email )

W. P. Carey School of Business
PO Box 873906
Tempe, AZ 85287-3906
United States

HOME PAGE: http://wpcarey.asu.edu/directory/stafffaculty.cfm?cobid=2168669

Marc Zenner (Contact Author)

Citigroup, Inc. - Investment Banking Division ( email )

Salomon Smith Barney
388 Greenwich St., 24th Flr
New York, NY 10013
United States

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