Macroeconomic Conditions and Capital Raising

Isil Erel, Brandon Julio (), Woojin Kim () and Michael Weisbach

The Review of Financial Studies, 2012, vol. 25, issue 2, 341-376

Abstract: Do macroeconomic conditions affect firms' abilities to raise capital? If so, how do they affect the manner in which the capital is raised? Using a large sample of publicly traded debt issues, seasoned equity offers, bank loans, and private placements of equity and debt, we find that a borrower's credit quality significantly affects its ability to raise capital during macroeconomic downturns. For noninvestment-grade borrowers, capital raising tends to be procyclical, while for investment-grade borrowers, it is countercyclical. Poor market conditions also affect the structure of securities offered, shifting them toward shorter maturities and more security. Overall, our results suggest that macroeconomic conditions influence the securities that firms issue to raise capital, the way in which these securities are structured, and indeed firms' ability to raise capital at all. The Author 2011. Published by Oxford University Press on behalf of The Society for Financial Studies. All rights reserved. For Permissions, please e-mail: journals.permissions@oup.com., Oxford University Press.

Date: 2012
References: Add references at CitEc
Citations: View citations in EconPapers (98)

Downloads: (external link)
http://hdl.handle.net/10.1093/rfs/hhr085 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Macroeconomic Conditions and Capital Raising (2011)
Working Paper: Macroeconomic Conditions and Capital Raising (2011)
Working Paper: Macroeconomic Conditions and Capital Raising (2011)
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: https://EconPapers.repec.org/RePEc:oup:rfinst:v:25:y:2012:i:2:p:341-376

Ordering information: This journal article can be ordered from
https://academic.oup.com/journals

Access Statistics for this article

The Review of Financial Studies is currently edited by Itay Goldstein

More articles in The Review of Financial Studies from Society for Financial Studies Oxford University Press, Journals Department, 2001 Evans Road, Cary, NC 27513 USA.. Contact information at EDIRC.
Bibliographic data for series maintained by Oxford University Press ().