Capital Market Financing, Firm Growth, and Firm Size Distribution

Research, Preprint English OPEN
Didier, Tatiana ; Levine, Ross ; Schmukler, Sergio L. (2015)
  • Publisher: World Bank, Washington, DC
  • Subject: DISCOUNT | TAXES | INTERNATIONAL BANK | EQUITY | INVESTORS | SECURITIES | GROSS DOMESTIC PRODUCT | MARKET EQUITY | INITIAL PUBLIC OFFERINGS | MATURITIES | LIABILITIES | CORPORATE GOVERNANCE | MATURITY STRUCTURE | INTERNATIONAL CAPITAL | STOCK MARKETS | EMERGING MARKET EQUITY | STOCK RETURNS | EQUITY MARKET CAPITALIZATION | DOMESTIC BOND | PROFITS | BALANCE SHEET | DUMMY VARIABLES | LENDING | BOND FINANCING | MATURITY | BOND ISSUING | EXCHANGES | EMERGING MARKET | IPO | INVESTMENT | BOND MARKET | MARKET LIQUIDITY | DOMESTIC BOND MARKETS | VALUATION | DOMESTIC CAPITAL | INFORMATION ASYMMETRY | EQUITIES | DEPOSIT | RETURNS | DEBT CAPACITY | BOND ISSUANCES | LONG-TERM DEBT | BROKERS | EQUITY MARKETS | INFORMATIONAL ASYMMETRIES | MARKET CAPITALIZATION | BALANCE SHEETS | FINANCIAL STRUCTURES | OFFSHORE FINANCIAL CENTERS | CAPITAL MARKET ACTIVITY | INVESTMENTS | BOND ISSUANCE | RETURN ON ASSETS | BANK CREDIT | INVESTMENT DECISIONS | LABOR MARKETS | CAPITAL STRUCTURE | INTERNATIONAL ECONOMICS | CASH FLOW | RISK EXPOSURE | CAPITAL MARKET DEVELOPMENT | FINANCIAL MARKETS | FINANCIAL SECTOR DEVELOPMENT | AMOUNT OF CAPITAL | CORPORATE BOND | FINANCIAL SYSTEM | PUBLIC FINANCE | CORPORATE BONDS | CAPITAL RAISING | FINANCIAL SYSTEMS | PRIVATE BOND | CAPITAL MARKETS | EQUITY MARKET | FUTURE | FINANCIAL DEVELOPMENT | Access to Finance,Economic Theory&Research,Debt Markets,Microfinance,Emerging Markets | RETURN | TRANSACTION | DOMESTIC EQUITY | FINANCIAL INSTITUTIONS | OWNERSHIP STRUCTURE | INSURANCE | MARKET DEVELOPMENT | PUBLIC OFFERINGS | FINANCIAL MARKET | ASYMMETRIC INFORMATION | VALUATIONS | ECONOMIC DEVELOPMENT | BONDS | LIQUIDITY | ACCOUNTING | CORPORATE BOND MARKETS | CAPITAL MARKET | BANK POLICY | HOME MARKET | LIQUID MARKETS | FOREIGN MARKETS | PRIMARY MARKETS | SECURITIES MARKETS | STOCK | PUBLIC DEBT MARKET | CAPITAL MARKET FINANCING | DUMMY VARIABLE | LIABILITY | COMMERCIAL PAPER | POLITICAL ECONOMY | STOCK MARKET | BOND ISSUERS | ISSUANCES | CORPORATE INVESTMENT | MARKET | MARKETS | CAPITALIZATION | STOCK MARKET DEVELOPMENT | PRIVATE CREDIT | CASH FLOWS | DEBT MARKET | EXCHANGE | EMERGING ECONOMIES | DEBT | INTERNATIONAL TRADE | EQUITY ISSUANCES | INTERNATIONAL MARKETS | CORPORATE BOND MARKET | DOMESTIC CAPITAL MARKET | EQUITY ISSUES | FINANCIAL STRUCTURE | BOND MARKET CAPITALIZATION | STOCK EXCHANGES | PUBLIC DEBT | FOREIGN CAPITAL | CONTRACTS | DEBT SECURITIES | FINANCIAL LIBERALIZATION | DEBT ISSUANCES | SECURITY | INTEREST | INVESTMENT BANKS | DOMESTIC MARKETS | CAPITAL ALLOCATION | INTERNATIONAL FINANCIAL INTEGRATION | FINANCIAL STUDIES | EQUITY ISSUANCE | ISSUERS OF SECURITIES | EQUITY FINANCING | DEPOSIT MONEY BANKS | FIRM PERFORMANCE | FOREIGN EQUITY | BOND | MARKET SIZE | ACCOUNTING STANDARDS | DEBT-EQUITY | BOND ISSUER | ISSUANCE | BOND MARKETS | Access to Finance, Bond Markets, Capital Market Development, Capital Raisings, Firm Dynamics, Firm Financing, Stock Markets | CONSUMER PRICE INDEX | FINANCE
    • jel: jel:G32 | jel:G31 | jel:G00 | jel:G10 | jel:L25

How many and which firms issue equity and bonds in domestic and international markets, how do these firms grow relative to non-issuing firms, and how does firm performance vary along the firm size distribution? To evaluate these questions, a new data set is constructed by matching data on firm-level capital raising activity with balance sheet data for 45,527 listed firms in 51 countries. Three main patterns emerge from the analysis. (1) Only a few large firms issue equity or bonds, and among them a small subset has raised a large proportion of the funds raised during the 1990s and 2000s. (2) Issuers grow faster than non-issuers in assets, sales, and employment, that is, firms do not simply use securities markets to adjust their financial accounts. (3) The firm size distribution of issuers evolves differently from that of non-issuers, tightening among issuers and widening among non-issuers.
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