World Markets for Raising New Capital

56 Pages Posted: 27 Dec 2004

See all articles by Brian J. Henderson

Brian J. Henderson

George Washington University - Department of Finance

Narasimhan Jegadeesh

Emory University - Department of Finance

Michael S. Weisbach

Ohio State University (OSU) - Department of Finance; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)

Multiple version iconThere are 2 versions of this paper

Date Written: December 12, 2003

Abstract

Financial markets are increasingly integrated globally. We examine the extent to which firms from countries around the world rely on different sources of capital, the locations where they raise capital, and the factors that affect these choices during the 1990-2001 period. International security issuances are widespread, totaling about $4.6 trillion. International debt issuances are substantially more common than equity issues, accounting for over 90% of the international security issues, and about 20% of all public debt issues. In contrast, international equity issues account for about 4.4% of all international security issues, and about 6% of all equity issues during the our sample period. Market timing considerations appear to be very important in security issuance decisions. Firms all around the world are more likely to issue equity prior to periods of low market returns. Most of the cross-border equity is issued in the U.S. and the U.K., and these issues tend to occur in "hot" markets, and prior to relatively low market returns. Finally, firms issue more debt when interest rates are lower, and issue debt overseas when interest rates in the place of issue are lower than they are at home.

Keywords: International Capital Raising, Timing of Security Issues

JEL Classification: G3, F3

Suggested Citation

Henderson, Brian Joseph and Jegadeesh, Narasimhan and Weisbach, Michael S., World Markets for Raising New Capital (December 12, 2003). AFA 2005 Philadelphia Meetings. Available at SSRN: https://ssrn.com/abstract=466540 or http://dx.doi.org/10.2139/ssrn.466540

Brian Joseph Henderson

George Washington University - Department of Finance ( email )

Department of Finance, Funger Hall
2201 G Street, NW
Washington, DC 20052
United States
202-994-3669 (Phone)

Narasimhan Jegadeesh

Emory University - Department of Finance ( email )

Atlanta, GA 30322-2710
United States

Michael S. Weisbach (Contact Author)

Ohio State University (OSU) - Department of Finance ( email )

2100 Neil Avenue
Columbus, OH 43210-1144
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

European Corporate Governance Institute (ECGI) ( email )

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

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