Why do firms issue abroad? Lessons from onshore and offshore corporate bond finance in Asian emerging markets

Mizen, P., Packer, F., Remolona, E. and Tsoukas, S. (2012) Why do firms issue abroad? Lessons from onshore and offshore corporate bond finance in Asian emerging markets. Working Paper. Bank for International Settlements.

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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.

Item Type:Research Reports or Papers (Working Paper)
Glasgow Author(s) Enlighten ID:Tsoukas, Professor Serafeim
Authors: Mizen, P., Packer, F., Remolona, E., and Tsoukas, S.
College/School:College of Social Sciences > Adam Smith Business School > Economics
Journal Name:Bank for International Settlements
Publisher:Bank for International Settlements
Published Online:01 December 2012

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