Capital inflows, equity issuance activity, and corporate investment

Charles W. Calomiris, Mauricio Larrain and Sergio Schmukler

Journal of Financial Intermediation, 2021, vol. 46, issue C

Abstract: This paper uses issuance-level data to study how equity capital inflows that enter emerging market economies affect equity issuance and corporate investment. It shows that foreign inflows are strongly correlated with country-level issuance. The relation especially reflects the behavior of large firms. To identify supply-side shocks, capital inflows into each country are instrumented with exogenous changes in other countries’ attractiveness to foreign investors. Shifts in the supply of foreign capital are important drivers of increased equity inflows. Instrumented contemporaneous and lagged capital inflows lead large firms to raise new equity, which they use to fund investment.

Keywords: Capital flows; Corporate financing; Emerging markets; Domestic investors; Foreign investors; Use of funds (search for similar items in EconPapers)
JEL-codes: F23 F32 F65 G11 G15 G31 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Related works:
Working Paper: Capital Inflows, Equity Issuance Activity, and Corporate Investment (2019)
Working Paper: Capital Inflows, Equity Issuance Activity, and Corporate Investment (2018)
Working Paper: Capital inflows, equity issuance activity, and corporate investment (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinin:v:46:y:2021:i:c:s1042957319300610

DOI: 10.1016/j.jfi.2019.100845

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