Capital Market Financing, Firm Growth, and Firm Size Distribution

HKIMR Working Paper No.17/2015

48 Pages Posted: 1 Sep 2015

See all articles by Tatiana Didier

Tatiana Didier

World Bank

Ross Levine

University of California, Berkeley - Haas School of Business; National Bureau of Economic Research (NBER)

Sergio L. Schmukler

World Bank - Development Research Group (DECRG)

Multiple version iconThere are 2 versions of this paper

Date Written: August 31, 2015

Abstract

How many and which firms issue equity and bonds in domestic and international markets, how do these firms grow relative to non-issuing firms, and how does firm performance vary along the firm size distribution (FSD)? To evaluate these questions, we construct a new dataset by matching data on firm-level capital raising activity with balance sheet data for 45,527 listed firms in 51 countries. Three main patterns emerge from the analysis. (1) Only a few large firms issue equity or bonds, and among them a small subset has raised a large proportion of the funds raised during the 1990s and 2000s. (2) Issuers grow faster than non-issuers in terms of assets, sales, and employment, that is, firms do not simply use securities markets to adjust their financial accounts. (3) The FSD of issuers evolves differently from that of non-issuers, tightening among issuers and widening among non-issuers.

Keywords: Access to Finance, Bond Markets, Capital Market Development, Capital Raisings, Firm Dynamics, Firm Financing, Stock Markets

JEL Classification: F65, G00, G10, G31, G32, L25

Suggested Citation

Didier, Tatiana and Levine, Ross Eric and Schmukler, Sergio, Capital Market Financing, Firm Growth, and Firm Size Distribution (August 31, 2015). HKIMR Working Paper No.17/2015. Available at SSRN: https://ssrn.com/abstract=2653479 or http://dx.doi.org/10.2139/ssrn.2653479

Tatiana Didier

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States
(202)458-1525 (Phone)

Ross Eric Levine

University of California, Berkeley - Haas School of Business ( email )

545 Student Services Building, #1900
2220 Piedmont Avenue
Berkeley, CA 94720
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Sergio Schmukler (Contact Author)

World Bank - Development Research Group (DECRG) ( email )

1818 H. Street, N.W.
MSN MC 3-301
Washington, DC 20433
United States
202-458-4167 (Phone)
202-522-3518 (Fax)

HOME PAGE: http://www.worldbank.org/en/about/people/s/sergio-schmukler

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