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Working Paper
On the Origins of the Multinational Premium
How do foreign direct investment (FDI) dynamics relate to the risk premium of a firm? To answer this question, we compare the stock returns of US firms with different FDI and mergers and acquisitions (M&A) exposure to study the evolution of stock returns as firms expand into foreign markets. We document three empirical regularities. First, there are cross-sectional risk premia associated with both multinational activity and mergers and acquisitions. Second, firm-level stock returns decline when a firm undertakes M&A activity and with merger deepening. Third, future multinational acquirers ...
Report
Corporate Credit Conditions Around the World: Novel Facts Through Holistic Data
We collect comprehensive granular data on various aspects of firms’ access to credit markets. We document ten facts that show that inferring credit conditions for new debt from those for existing debt – and vice versa – leads to erroneous conclusions. Secondary market spreads are poor proxies of the cost of new debt. Investment grade issuance is driven by firms’ own secondary market spreads, while high yield issuance responds to macroeconomic conditions. Bond issuances overstate changes in firm indebtedness. Emerging market bond and loan borrowing is complementary for firms with ...