On the Integration of International Capital Markets: Evidence From Euroequity Offerings

M. Wayne Marr, John L. Trimble and Raj Varma

Financial Management, 1991, vol. 20, issue 4

Abstract: Euroequity, a new financial instrument, is a new issue of stock by a U.S. firm that is sold simultaneously to investors domestically as registered shares and offshore as bearer shares. In perfectly integrated capital markets, whether Euroequity or domestic equity is issued should not have differential effects on a firm's stock price. Like past studies of domestic equity-financing announcements, we find negative stock-price responses for announcements of equity offers. Our findings are consistent with the hypothesis that, during their infancy, new financial instruments which reduce previously effective barriers to investment across national borders enable firms to capitalize on beneficial financing opportunities in overseas markets.

Date: 1991
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