Does Internationalization Shape Debt Structure? Evidence from U.S. Multinational Firms

Abstract

This paper examines the impact of firms’ international activities on their debt structures. Using a sample of 4,532 U.S. firms from 2001–2021, we find that internationalization levels are positively related to the dispersion of debt structure. This result remains robust across various measures of debt structure and internationalization and holds after addressing self-selection and endogeneity issues. We also explore the underlying mechanism and find that the more dispersed debt structures of internationalized firms are largely driven by the risk diversification benefits of internationalization. This paper contributes to a better understanding of the role of internationalization in shaping capital structure decisions.

Keywords: Debt Structure, Internationalization, Financial Distress, Risk Diversification

JEL Classification: G15, G32, G33