Capital Market Financing, Firm Growth, Firm Size Distribution
53 Pages Posted: 28 Jul 2014
Date Written: July 2014
Which firms issue equity and debt in domestic and international markets and what happens to their assets, sales, and number of employees? To answer these questions, we assemble a new dataset on firm-level capital raising activity during 1991-2011, which we match with firm attributes for 45,527 listed firms from 51 economies during 2003-2011. We find that only a few of the largest firms issue securities in the median country. Firms issuing bonds are even larger than those issuing equity. Moreover, issuers grow much faster than non-issuers, particularly (a) during the year of issuance, (b) among smaller and younger firms, and (c) in countries with market-based financial systems. Furthermore, the firm size distribution (FSD) of issuers behaves differently from that of non-issuers. Among issuers, smaller firms grow faster than larger ones, tightening their FSD; but among non-issuers, larger firms grow faster than smaller ones, widening their FSD.
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