Abstract
Comparisons of financing decisions of domestic and multinational firms provide contrasting results. Some indicate that multinationals operate at higher levels of debt, whilst others suggest domestic firms use more leverage. We test whether managers of multinational firms increase the use of debt capital or prefer theoretically more expensive equity financing as internationalization increases. We find that multinational companies use similar or lower leverage than domestic firms and are more likely to raise new equity capital than new debt. Our evidence indicates that internationalization leads to the use of more expensive capital from the domestic market at a cost to shareholders. International markets are used sparingly.
Original language | English |
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Article number | 100652 |
Journal | Journal of Multinational Financial Management |
Volume | 57-58 |
Issue number | 2 |
Early online date | 24 Sept 2020 |
DOIs | |
Publication status | Published - Dec 2020 |
Keywords
- Capital raising
- Capital structure
- Internationalization
- Multinational
ASJC Scopus subject areas
- Finance
- Economics and Econometrics