Internationalization and Firm Valuation: New Evidence from First Offshore Bond Issuances of US Firms

Abstract

Does internationalization affect firm valuation? To answer this question, literature mainly considers firms from around the world internationalizing by issuing equity in the USA, whereas the current study focuses on US firms that internationalize by issuing debt in overseas markets. This paper provides evidence on theories of internationalization and capital structure, finding that overseas corporate debt offerings have a positive short-term effect on US firms’ valuations. The effect varies in firm characteristics, timing, and the location of the issue. Additionally, firms with a strong need for external funds and growth prospects accelerate their offshore public debt market entry.

Keywords: Internationalization; Dept Structure; Segmentation; Tobin's

JEL Classification: G15; G32; F36