Why do firms issue global bonds?

Oranee Tawatnuntachai, Devrim Yaman

Research output: Contribution to journalArticlepeer-review

3 Scopus citations


Purpose – This paper aims to examine the motivations of firms that issue global bonds. Specifically, it seeks to test whether firms are motivated to offer bonds in multi-markets to raise more capital, take advantage of being well-known in foreign markets and/or owing to poor domestic economic conditions. Design/methodology/approach – A sample of global bond offerings of US industrial firms during the period 1995 to 2001 was studied. Logistic regressions were used to examine the determinants of the choice between global and domestic debt offerings. The factors that explain the stock price reaction of global bond issues were also analyzed. Findings – The authors find evidence suggesting that firms with a good reputation abroad and firms that want to raise large amounts of funds choose to issue global bonds instead of domestic bonds. Firms also tend to issue global bonds when the domestic economy is weak. In addition, the stock markets do not react more positively to global bond issues than domestic bond issues, suggesting that the issuing cost of global bonds is not lower than the cost of domestic bonds. Research limitations/implications – Future researchers may want to investigate why some firms choose to issue global bonds while others choose Eurobonds when they want to issue debt internationally. Practical implications – The findings of this study suggest that, although firms might be able to raise more capital by issuing global bonds, the issuing costs are not lower. Originality/value – This is the first paper to study the determinants of the choice between global bonds and domestic bonds and examine the factors that affect the stock price reaction to global bonds.

Original languageEnglish (US)
Pages (from-to)23-40
Number of pages18
JournalManagerial Finance
Issue number1
StatePublished - Dec 24 2007

All Science Journal Classification (ASJC) codes

  • Business, Management and Accounting (miscellaneous)
  • Finance


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