First offshore bond issuances and firm valuation |
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Institution: | 1. University of Vaasa, School of Accounting and Finance, P.O. Box 700, FI-65101 Vaasa, Finland;2. University of St. Gallen, Swiss Institute of Banking and Finance, Unterer Graben 21, CH-9000 St.Gallen, Switzerland |
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Abstract: | Does the first offshore bond initial public offering (BIPO) affect firm valuation? By using a sample of US firms we document the dynamics of the firm valuation in response to initial offshore bond issuance. We find that offshore BIPOs have a positive short-term effect on US firms' valuations. The effect varies in firm characteristics, timing, and the location of the issue. Positive valuation effect is further confirmed by using difference-in-differences analysis approach, where offshore bond issuers are compared with their domestic counterparts. Additionally, firms with a strong need for external funds and growth prospects accelerate their offshore public debt market entry. |
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