nep-ifn New Economics Papers
on International Finance
Issue of 2013‒02‒08
one paper chosen by
Vimal Balasubramaniam
University of Oxford

  1. Why do firms issue abroad? Lessons from onshore and offshore corporate bond finance in Asian emerging markets By Paul Mizen; Frank Packer; Eli Remolona; Serafeim Tsoukas

  1. By: Paul Mizen; Frank Packer; Eli Remolona; Serafeim Tsoukas
    Abstract: Corporate bond issuers in emerging economies in Asia have often had a choice between an onshore market and an offshore one. Since 1998, however, many of these issuers have increasingly turned to the onshore market. This paper investigates systematically what factors have influenced this choice between markets for issuers in eight emerging economies – China, Hong Kong SAR, Indonesia, Korea, Malaysia, the Philippines, Singapore and Thailand. For variables measuring market depth and liquidity, the availability of hedging instruments, and the size of the investor base, we rely on BIS statistics that have not been used in this literature before. We combine these market-level data with firm-level data in an unbalanced panel for the eight countries covering the period 1995 to 2007. We control for variables representing agency, static trade-off and risk management theories of the capital structure. Our results show that the choice between domestic and foreign markets has changed over time in large part because of the increased depth of the onshore market. The firms that benefit from such market development tend to be the unseasoned issuers rather than the seasoned ones.
    Keywords: bond financing, offshore markets, derivatives, capital structure, emerging markets, market depth, Asian bond markets
    JEL: C23 E44 F32 F34 G32 O16
    Date: 2012–12
    URL: http://d.repec.org/n?u=RePEc:gla:glaewp:2012_16&r=ifn

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