scholarly journals Internal versus External Capital Markets

10.3386/w4776 ◽  
1994 ◽  
Author(s):  
Robert Gertner ◽  
David Scharfstein ◽  
Jeremy Stein
Keyword(s):  
Capital Markets ◽  
External Capital

With one hand tied behind their back

2017 ◽  
Author(s):  
Graeme Guthrie
Keyword(s):  
New York ◽  
Capital Markets ◽  
Capital Market ◽  
Cable Television ◽  
Share Repurchases ◽  
Internal Capital Market ◽  
Internal Capital ◽  
External Capital ◽  
Investment Returns ◽  
Break Up

This chapter uses the New York cable television provider Cablevision to describe the way in which boards can delegate some of the task of monitoring management to participants in external capital markets. Unlike a firm’s current shareholders, who have little say over how their funds are allocated, external capital markets provide their funds only if the investment returns are adequate. This chapter shows how managers of firms with substantial cash-generating assets in place can use the collateral that these assets provide to weaken the discipline of external capital markets. It shows how their ability to do this is restricted if the board authorizes share repurchases or special dividends funded by increased borrowing, as these replace “soft” payouts to shareholders with “hard” payouts to bondholders. Managers’ ability to exploit collateral is further restricted if the board uses spinoffs to break up the firm’s internal capital market.

scholarly journals Internal versus External Capital Markets

1994 ◽  
Vol 109 (4) ◽  
pp. 1211-1230 ◽  
Author(s):  
R. H. Gertner ◽  
D. S. Scharfstein ◽  
J. C. Stein
Keyword(s):  
Capital Markets ◽  
External Capital

Do Non-U.S. Firms Issue Equity on U.S. Stock Exchanges to Relax Capital Constraints?

2005 ◽  
Vol 40 (1) ◽  
pp. 109-133 ◽  
Author(s):  
Karl V. Lins ◽  
Deon Strickland ◽  
Marc Zenner
Keyword(s):  
Market Segmentation ◽  
Capital Markets ◽  
Emerging Market ◽  
Free Cash Flow ◽  
Stock Exchanges ◽  
Important Benefit ◽  
Capital Constraints ◽  
External Capital ◽  
Emerging Capital Markets ◽  
Capital Access

AbstractThe positive market reaction associated with an ADR listing is frequently attributed to a reduction in market segmentation costs that improves access to capital. If so, the benefit should be greatest for ADR firms that face relatively high indirect barriers to capital access. Our paper directly tests this supposition. We document that, following a U.S. listing, the sensitivity of investment to free cash flow decreases significantly for firms from emerging capital markets, but does not change for developed market firms. Further, emerging market ADR firms mention the need for access to external capital markets in their filing documents more frequently than their developed market counterparts and, in the post-ADR period, tout their liquidity rather than a need for capital access. Finally, the increase in capital access following an ADR is more pronounced for firms from emerging markets. Our findings suggest that greater access to external capital markets is an important benefit of a U.S. stock market listing for emerging market firms and is less important for developed market firms.

scholarly journals CORPORATE GOVERNANCE AND FINANCIAL CONSTRAINTS IN FAMILY CONTROLLED FIRMS: EVIDENCE FROM MALAYSIA

2017 ◽  
Vol 17 (3) ◽  
Author(s):  
Ei-Yet Chu ◽  
Tian-So Lai ◽  
Saw-Imm Song
Keyword(s):  
Corporate Governance ◽  
Capital Markets ◽  
Financial Constraints ◽  
Family Firms ◽  
Independent Directors ◽  
Equity Financing ◽  
Ceo Duality ◽  
Investment Opportunities ◽  
Internal Capital ◽  
External Capital

The hypothesis of financial constraints suggests that firms will be denied profitable investment dueto inaccessible to external capital markets as debt and equity financing are no longer perfectsubstitutions after firms utilize internal capital. In view of reduced investments during globalfinancial crisis in 2008-2009, the study investigates 157 firms, whether they face the issues offinancial constraints in Malaysia. In general, non-family firms rely heavily on the external debtmarket while family controlled firms utilizing internal cash and reducing their dependence on debtmarket for their investments, confirming financial constraints in family firms. However, thepresence of CEO duality does not exaggerate the problem of financial constraints, but rather leadsfamily firms to become stagnant in their investments. Independent directors appear to beineffective in governing family firms in issuing finances for investment. Apparently, their presencein family firms reduces firms’ investment opportunities either through internal cash and externaldebt financing, which could reduce shareholders’ value in the long-term.Keywords: Investments; Financial Constraints; Corporate Governance; Duality; IndependentDirector; Family Controlled firms.

The Effect of Mandatory IFRS Adoption on International Cross-Listings

2014 ◽  
Vol 90 (4) ◽  
pp. 1395-1435 ◽  
Author(s):  
Long Chen ◽  
Jeff Ng ◽  
Albert Tsang
Keyword(s):  
Capital Markets ◽  
Capital Market ◽  
Difference In Differences ◽  
Ifrs Adoption ◽  
Cross Listing ◽  
Disclosure Requirements ◽  
External Capital ◽  
Market Consequences ◽  
The Capital Market

ABSTRACT Using a comprehensive dataset of international cross-listings spanning 34 (50) home (target) countries, we examine whether mandatory IFRS adoption facilitates firms' cross-listing activities. Our results using difference-in-differences analyses show that firms that mandatorily adopt IFRS exhibit significantly higher cross-listing propensity and intensity following IFRS adoption. We also find that firms from mandatory IFRS adoption countries are more likely to cross-list their securities in countries also mandating IFRS and countries with larger and more liquid capital markets. We further find that IFRS adoption has a greater effect on mandatory IFRS adopters from countries with larger accounting differences from IFRS, lower disclosure requirements, and less access to external capital prior to IFRS adoption. Our findings are consistent with the notion that mandatory IFRS adoption facilitates firms' cross-listing activities and highlight the importance of considering the change in cross-listings when examining the capital market consequences of mandatory IFRS adoption.

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