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Capital Inflows, Equity Issuance Activity, and Corporate Investment

Charles Calomiris, Mauricio Larrain () and Sergio Schmukler ()
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Mauricio Larrain: Universidad Catolica de Chile School of Management and Financial Market Commission of Chile

No 156, Mo.Fi.R. Working Papers from Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences

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)
New Economics Papers: this item is included in nep-cfn and nep-ifn
Date: 2019-07
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http://docs.dises.univpm.it/web/quaderni/pdfmofir/Mofir156.pdf First version, 2019 (application/pdf)

Related works:
Working Paper: Capital Inflows, Equity Issuance Activity, and Corporate Investment (2018) Downloads
Working Paper: Capital inflows, equity issuance activity, and corporate investment (2018) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:anc:wmofir:156

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