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An Empirical Study on the Long-Run Performance of International Bond Issues by Multinational Corporations

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Publisher
한국무역학회
Publication Date
Keywords
  • 국제채권 발행
  • 아시아위기
  • 러시아 모라토리움
  • 기업특유 요인
  • 선진국 및 개도국 다국적 기업
  • 장기적 성과
  • 사건연구
  • 누적 비정상수익률
  • Long-Term Performance
  • Event Study
  • International Bonds
  • Russia`S Moratorium
  • Multinational Co
  • Firm-Specific Factors
  • Asian Financial Crisis
  • Cumulative Abnormal Returns
  • Cars

Abstract

Since the late 1980s, many multinational corporations(MNCs) have been issuing international bonds, mainly attributable to the rapid financial globalization and securitization trends. The main purpose of this study is to look into the long-run performance of MNCs' international bond issues. The event study and cross-sectional regression methods are used to examine the relation between the cumulative abnormal returns and firm-specific explanatory variables. Several important empirical results about the long-run effect of international bond issues on stock prices were found. Firstly, the long-run effect is negative CARs for their underlying stocks. Secondly, under the premise that the effect may differ depending upon the status of the world economy and crisis times, the whole sample period was decomposed into the two sub periods: the pre-crisis period before 1998, and the post-crisis period after 1998. However, there was no significant difference in the stock price performance. Thirdly, firm-specific variables affect the long-run performance to some extent, and the performance is better, when firm size is larger, ROE is higher, and debt ratio is higher. It implies that the stock market response may be better when issuing MNCs are larger and have future profitable projects, despite a higher debt ratio.

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