Capital Markets: Financing Business Over the Long Term

2021 ◽  
pp. 215-250
Author(s):  
John E. Silvia
Keyword(s):  
Capital Markets

Private Placements in the Capital Markets Union

2018 ◽  
Author(s):  
Frank GB Graaf
Keyword(s):  
Capital Markets ◽  
Alternative Source ◽  
Private Placement ◽  
Private Placements ◽  
Capital Markets Union

This chapter looks at recent initiatives in the context of the European Commission's flagship plans for a Capital Markets Union (CMU) designed to encourage a pan-European private placement market. In reality, private placements are mainly available as a funding tool for medium-sized and larger companies. Nonetheless, private placements are regarded by CMU's policymakers as an alternative source of long-term funding, which is simple enough for smaller corporates and small and medium-sized enterprises (SME), and with benefits that they might find attractive. The Commission's initial intention in the design of a CMU was to enable a greater use by SMEs of private placements.

Take it to the (public) bank: The efficiency of public bank loans to private firms

2020 ◽  
Vol 0 (0) ◽  
Author(s):  
Anders Kärnä
Keyword(s):  
Economic Growth ◽  
Capital Markets ◽  
Firm Growth ◽  
Bank Loans ◽  
Government Interventions ◽  
The Public ◽  
Positive Effects ◽  
Economic Output ◽  
Unique Dataset

AbstractIncomplete capital markets and credit constraints for small and medium-sized enterprises (SMEs) are often considered obstacles to economic growth, thus motivating government interventions in capital markets. While such policies are common, it is less clear to what extent these interventions result in firm growth or to which firms interventions should be targeted. Using a unique dataset with information about state bank loans targeting credit-constrained SMEs in Sweden with and without complementary private bank loans, this paper contributes to the literature by studying how these loans affect the targeted firms for several outcome variables. The results suggest that the loans create a one-off increase in investments, with long-term, positive effects for sales and labor productivity but only for firms with 10 or fewer employees. Increased access to capital by firms can therefore produce increases in economic output but only in a specific type of firm. This insight is of key importance in designing policy if the aim is to increase economic growth.

Financial Instruments and the Capital Markets

2019 ◽  
pp. 47-64
Author(s):  
Alan N. Rechtschaffen
Keyword(s):  
Capital Markets ◽  
Regulatory Compliance ◽  
Financial Instruments ◽  
Federal Regulation ◽  
Secondary Markets ◽  
Financial Transactions ◽  
Digital Assets

This chapter begins with a discussion on the capital markets. It compares primary and secondary markets, and long-term versus short-term marketplaces. This is followed by a case study on the auction rate securities (ARS) market. The second section discusses financial instruments, covering the types of financial instruments (equity-based financial instruments, debt-based financial instruments, derivatives, cryptocurrency and digital assets), and the distinction between debt and equity, and federal regulation. The final section deals with the role of the attorney. It discusses competent representation, the duty to advise the client, drafting financial instruments, regulatory compliance, and the issuance of opinion letters to clients regarding the implications of financial transactions.

Financial markets as commensurating machines

2019 ◽  
Vol 58 (4) ◽  
pp. 539-565
Author(s):  
Barbara Kuchler
Keyword(s):  
Financial Markets ◽  
Capital Markets ◽  
Capital Market ◽  
Capital Flows ◽  
Financial System ◽  
Financial Assets ◽  
Financial Instruments ◽  
Black Scholes ◽  
Derivatives Markets

Ever since the crisis of 2008, the dynamism and self-referentiality of financial markets have puzzled observers. This article argues that this dynamism is the product of a long process of commensuration, by which ever more heterogeneous financial assets and financial instruments have come to be compared with, substituted for, and valuated relatively to one another, and have thereby been condensed into a highly interconnected financial system. This trajectory can be found both in the long-term historical emergence of financial markets from ancient origins and in the more recent transformations of the financial system since the 1970s, including (i) the rise of derivatives markets, and (ii) the rise of capital markets as against bank-intermediated capital flows. The rise of derivatives markets was triggered by the commensuration of basic securities (such as stock, bond) and derivatives (such as options, futures), established by the Black-Scholes-Merton theory of option pricing. The rise of capital markets was rooted in the commensuration – and hence, competition and substitution – of bank products (such as loans, deposits) and non-bank products (capital market securities).

SHORT- AND LONG-TERM EFFECTS OF THE 9/11 EVENT: THE INTERNATIONAL EVIDENCE

2005 ◽  
Vol 08 (07) ◽  
pp. 947-958 ◽  
Author(s):  
VINCENT RICHMAN ◽  
MICHAEL R. SANTOS ◽  
JOHN T. BARKOULAS
Keyword(s):  
Stock Market ◽  
Capital Markets ◽  
Systematic Risk ◽  
Point Of View ◽  
Long Term Effects ◽  
Market Reactions ◽  
Theoretic Point ◽  
Short And Long Term ◽  
Stock Market Reactions

This paper analyzes the short- and long-term effects of the September 11, 2001 terrorist attacks on a comprehensive sample of stock market indices from 33 industrial and emerging economies. From a finance-theoretic point of view, we employ the international capital asset pricing model (ICAPM) to analyze the incidence of the 9/11 event. Consistent with expectations, we document statistically negative short-term stock market reactions to the 9/11 event for 28 countries. More importantly, we find increases in the level of systematic risk for 10 stock markets which attest to the presence of negative permanent effects emanating for the 9/11 event. However, a great many capital markets (including the US, Canada, Japan, China, Russia, and the largest European economies) did not experience statistically significant increases in systematic risk in the post-9/11 period. The decisiveness of the evidence clearly points in the direction of resilience and flexibility of the world capital markets.

scholarly journals The long-run performance of US firms pursuing IPOs in foreign markets

2018 ◽  
Vol 17 (1) ◽  
pp. 58-77 ◽  
Author(s):  
Robert Killins ◽  
Peter V. Egly
Keyword(s):  
Capital Markets ◽  
Abnormal Returns ◽  
Listed Companies ◽  
Foreign Markets ◽  
Content Type ◽  
Long Run ◽  
The Us ◽  
Long Term Performance ◽  
Term Performance

Purpose The purpose of this paper is to investigate the long-run performance of a unique set of US domiciled firms that have bypassed the US capital markets in pursuit of their initial public offering (IPO) overseas. Additionally, this paper then tests the popular underwriter prestige impact and the window of opportunity hypothesis on this unique subset of IPOs. Design/methodology/approach Using a sample of foreign and purely domestic IPOs made by US firms from 2000 to 2011, this study investigates the long-term performance, one-, two- and three-year by using two measures (buy-and-hold return and cumulative abnormal returns) to test the long-run returns of newly listed companies. Finally, the research incorporates both the traditional matching methodology (issue year and size) along with propensity score matching methodology. Findings FIPOs of US companies underperform DIPOs and their matched DIPOs; furthermore, FIPOs underperform the index of the two listing countries they use the most (UK and Canada). Although the choice of a reputable underwriter mitigates underperformance, the choice of listing in a foreign country only may be a result of possible high valuations accorded by foreign investors who buy US-listed companies on the domestic exchange possibly for reducing exchange rate risk and gaining US diversification without incurring additional costs. It is, thus, possible that US companies that undertake Foreign IPOs not only escape potentially higher Security and Exchange Commission regulations and disclosure but also benefit from higher valuations in the foreign markets. Originality/value To the best of the authors’ knowledge, this is the first study to investigate the long-term performance of US firms bypassing the US capital markets in pursuit of their initial equity offering elsewhere. Caglio et al. (2016) investigated why firms decide to pursue such equity raising activity but fail to investigate the firms’ actual performance after issuing equity. This research fills such a gap in the literature and is important for both academics and practitioners. Practitioners can use this information in assessing the quality of such investments in the long-run, and firms can use such information when determining the different options of issuing equity. Further, regulators should be aware of the implications that increased regulations have on capital raising activities in their domestic market.

Capital Markets in the EEC: The Sources and Uses of Medium- and Long-Term Finance.

Economica ◽  
1978 ◽  
Vol 45 (179) ◽  
pp. 316
Author(s):  
Jack Revell ◽  
E. Victor Morgan ◽  
Richard Harrington
Keyword(s):  
Capital Markets

Causes and Consequences of the Korean Financial Crisis

2000 ◽  
Vol 03 (01) ◽  
pp. 1-26 ◽  
Author(s):  
Dosoung Choi ◽  
Frank C. Jen ◽  
H. Han Shin
Keyword(s):  
Corporate Governance ◽  
Financial Crisis ◽  
Capital Markets ◽  
Business Sector ◽  
External Shocks ◽  
Business Risk ◽  
Short Term ◽  
The Past ◽  
Debt Capital

During the past decade, the profitability of Korean firms has declined significantly while their business risk has risen substantially. The deteriorating condition was largely due to excessive investments in manufacturing capacity that were financed mainly with short-term debt capital. The measures to restructure the system are summarized in two major thrusts: one, to reform corporate governance so that the business sector becomes more transparent and more value-enhancing; and two, to help develop long-term capital markets so that the domestic financial system becomes less vulnerable to external shocks.

scholarly journals The Exposure Rate Of Existing Shareholders, Underpricing And IPO Withdrawals At Borsa Istanbul: A Special Look At Opportunity Cost Of Issuance

2020 ◽  
Vol 7 (3) ◽  
pp. 150-161
Author(s):  
Orhan Emre Elma
Keyword(s):  
Capital Markets ◽  
Opportunity Cost ◽  
Positive Outcome ◽  
Exposure Rate ◽  
Firm Age ◽  
Public Offerings ◽  
Life And Death ◽  
Positive Correlations ◽  
The Relationship

Capital markets play a key role in achieving the medium and long-term goals of companies to reach the point of comparison with their competitors in the world. Capital markets journey, which is so important for companies, can also be called a life and death war. Not every issuance application to regulators results in a positive outcome. Turkey is the third country that is experiencing the most IPO withdrawal, according to Bennouna's (2015) study. Reasons such as wrong timing of the issuance or not being able to create positive sentiment among stakeholders cause issuance withdrawals. Companies aim to guarantee the earnings of their first partners in the long term rather than bringing immediate positive returns for their new investors. For this reason, the damage suffered by the first partners in IPO is an important parameter in understanding capital markets, along with underpricing. In this study, 76 public offerings in Borsa Istanbul between 2005 and 2015 were examined according to Dolbin's (2013) methodology. The discount rate applied by the companies during this period is 22.86%, while the underpricing rate applied is around 4.3%. Results show that, opportunity cost of issuance, which is the loss suffered by the first partners is found to be only 1.3% at Borsa Istanbul. Also, the relationship between underpricing and opportunity cost of issuance is found to be 74.7%. The withdrawal rate have positive correlations of 36.6% and 40.4% with firm age and cost per share, respectively. Results also indicates that, withdrawal rates starts to diminish at hot markets when average market volatility rises.

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