Securities laws in the host countries and the capital structure of US multinationals

Dev Mishra () and George Tannous

International Review of Economics & Finance, 2010, vol. 19, issue 3, 483-500

Abstract: We examine whether securities laws in the host countries influence the capital structure choice of United States (US) multinational corporations. We develop firm-level global indices to classify each corporation in terms of its exposure to the security laws that govern the rights of security holders in the countries where it has subsidiaries. The results show that the use of long-term debt is positively related to the firm's global standing in terms of common law legal origin, burden of proof, investor protection, disclosure requirements, and public enforcement. The securities laws in a country affect the capital structure of multinational corporations that has subsidiaries in that country.

Keywords: International; diversification; Capital; structure; Securities; laws; International; finance (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:19:y:2010:i:3:p:483-500

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