Capital Inflows, Equity Issuance Activity, and Corporate Investment

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 rel...

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Main Authors:	Calomiris, Charles W., Larrain, Mauricio, Schmukler, Sergio L.
Format:	Working Paper
Language:	English
Published:	World Bank, Washington, DC 2018
Subjects:	CAPITAL FLOWS CORPORATE FINANCE EMERGING MARKET ECONOMIES DOMESTIC INVESTORS FOREIGN INVESTORS EQUITY ISSUANCE INVESTMENT FOREIGN DIRECT INVESTMENT
Online Access:	http://documents.worldbank.org/curated/en/470511523557571868/Capital-inflows-equity-issuance-activity-and-corporate-investment http://hdl.handle.net/10986/29706

id	okr-10986-29706
recordtype	oai_dc
spelling	okr-10986-297062021-06-14T10:09:32Z Capital Inflows, Equity Issuance Activity, and Corporate Investment Calomiris, Charles W. Larrain, Mauricio Schmukler, Sergio L. CAPITAL FLOWS CORPORATE FINANCE EMERGING MARKET ECONOMIES DOMESTIC INVESTORS FOREIGN INVESTORS EQUITY ISSUANCE INVESTMENT FOREIGN DIRECT INVESTMENT 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 reflects the behavior of large issuers issuing in domestic equity markets and that of firms issuing in international markets. Those larger, more liquid, and highly valued firms are the ones more likely to raise equity when their country receives capital inflows. 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 inflows lead a subset of firms (large domestic issuers and foreign issuers) to raise new equity, which they use to fund investment. Corporate investment increases between one-tenth and four-tenths the amount of foreign equity capital entering the country. 2018-04-20T13:37:20Z 2018-04-20T13:37:20Z 2018-04 Working Paper http://documents.worldbank.org/curated/en/470511523557571868/Capital-inflows-equity-issuance-activity-and-corporate-investment http://hdl.handle.net/10986/29706 English Policy Research Working Paper;No. 8405 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	CAPITAL FLOWS CORPORATE FINANCE EMERGING MARKET ECONOMIES DOMESTIC INVESTORS FOREIGN INVESTORS EQUITY ISSUANCE INVESTMENT FOREIGN DIRECT INVESTMENT
spellingShingle	CAPITAL FLOWS CORPORATE FINANCE EMERGING MARKET ECONOMIES DOMESTIC INVESTORS FOREIGN INVESTORS EQUITY ISSUANCE INVESTMENT FOREIGN DIRECT INVESTMENT Calomiris, Charles W. Larrain, Mauricio Schmukler, Sergio L. Capital Inflows, Equity Issuance Activity, and Corporate Investment
relation	Policy Research Working Paper;No. 8405
description	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 reflects the behavior of large issuers issuing in domestic equity markets and that of firms issuing in international markets. Those larger, more liquid, and highly valued firms are the ones more likely to raise equity when their country receives capital inflows. 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 inflows lead a subset of firms (large domestic issuers and foreign issuers) to raise new equity, which they use to fund investment. Corporate investment increases between one-tenth and four-tenths the amount of foreign equity capital entering the country.
format	Working Paper
author	Calomiris, Charles W. Larrain, Mauricio Schmukler, Sergio L.
author_facet	Calomiris, Charles W. Larrain, Mauricio Schmukler, Sergio L.
author_sort	Calomiris, Charles W.
title	Capital Inflows, Equity Issuance Activity, and Corporate Investment
title_short	Capital Inflows, Equity Issuance Activity, and Corporate Investment
title_full	Capital Inflows, Equity Issuance Activity, and Corporate Investment
title_fullStr	Capital Inflows, Equity Issuance Activity, and Corporate Investment
title_full_unstemmed	Capital Inflows, Equity Issuance Activity, and Corporate Investment
title_sort	capital inflows, equity issuance activity, and corporate investment
publisher	World Bank, Washington, DC
publishDate	2018
url	http://documents.worldbank.org/curated/en/470511523557571868/Capital-inflows-equity-issuance-activity-and-corporate-investment http://hdl.handle.net/10986/29706
_version_	1764470026575806464

Capital Inflows, Equity Issuance Activity, and Corporate Investment

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