Economics at your fingertips  

Why do firms issue global bonds?

Oranee Tawatnuntachai and Devrim Yaman

Managerial Finance, 2007, vol. 34, issue 1, 23-40

Abstract: Purpose - This paper aims to examine the motivations of firms that issue global bonds. Specifically, it seeks to test whether firms are motivated to offer bonds in multi-markets to raise more capital, take advantage of being well-known in foreign markets and/or owing to poor domestic economic conditions. Design/methodology/approach - A sample of global bond offerings of US industrial firms during the period 1995 to 2001 was studied. Logistic regressions were used to examine the determinants of the choice between global and domestic debt offerings. The factors that explain the stock price reaction of global bond issues were also analyzed. Findings - The authors find evidence suggesting that firms with a good reputation abroad and firms that want to raise large amounts of funds choose to issue global bonds instead of domestic bonds. Firms also tend to issue global bonds when the domestic economy is weak. In addition, the stock markets do not react more positively to global bond issues than domestic bond issues, suggesting that the issuing cost of global bonds is not lower than the cost of domestic bonds. Research limitations/implications - Future researchers may want to investigate why some firms choose to issue global bonds while others choose Eurobonds when they want to issue debt internationally. Practical implications - The findings of this study suggest that, although firms might be able to raise more capital by issuing global bonds, the issuing costs are not lower. Originality/value - This is the first paper to study the determinants of the choice between global bonds and domestic bonds and examine the factors that affect the stock price reaction to global bonds.

Keywords: Bonds; Debts; Stock prices (search for similar items in EconPapers)
Date: 2007
References: Add references at CitEc
Citations Track citations by RSS feed

Downloads: (external link) ... RePEc&WT.mc_id=RePEc (text/html)
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This journal article can be ordered from
Emerald Group Publishing, Howard House, Wagon Lane, Bingley, BD16 1WA, UK
http://emeraldgroupp ... s/journals.htm?id=mf

Access Statistics for this article

Managerial Finance is currently edited by Professor Don T Johnson

More articles in Managerial Finance from Emerald Group Publishing
Series data maintained by Virginia Chapman ().

Page updated 2018-02-10
Handle: RePEc:eme:mfipps:v:34:y:2007:i:1:p:23-40