The Costs, Wealth Effects, and Determinants of International Capital Raising: Evidence from Public Yankee Bonds

This paper examines the costs, wealth effects, and determinants of international capital raising for a sample of 260 public debt issues made by non-U.S. firms in the U.S. (Yankee) market. We find that investors demand economically significant premiums on bonds issued by firms that are located in countries that do not protect investors' rights and do not have a prior history of on-going disclosure. The results provide support for the literature that suggests better legal protections and more detailed information disclosure increases the price investors will pay for financial assets. We also find that the average stock price reaction to Yankee bond offerings is significantly positive and that abnormal returns are largest for first-time Yankee bond issuers. In addition, we show that foreign firms tend to issue in the Yankee market when the relative interest cost is low, indicating that potential differences in borrowing costs influence where firms choose to sell bonds.http://deepblue.lib.umich.edu/bitstream/2027.42/39829/3/wp445.pd

The Costs, Wealth Effects, and Determinants of International Capital Raising: Evidence from Public Yankee Bonds

This paper examines the costs, wealth effects, and determinants of international capital raising for a sample of 260 public debt issues made by non-U.S. firms in the U.S. (Yankee) market. We find that investors demand economically significant premiums on bonds issued by firms that are located in countries that do not protect investors' rights and do not have a prior history of on-going disclosure. The results provide support for the literature that suggests better legal protections and more detailed information disclosure increases the price investors will pay for financial assets. We also find that the average stock price reaction to Yankee bond offerings is significantly positive and that abnormal returns are largest for first-time Yankee bond issuers. In addition, we show that foreign firms tend to issue in the Yankee market when the relative interest cost is low, indicating that potential differences in borrowing costs influence where firms choose to sell bonds.Banking and Finance, Yankee bonds, International Capital Raising

Security fungibility and the cost of capital: evidence from global bonds

This paper examines the potential benefits of security fungibility by conducting the first comprehensive analysis of Global bonds. Unlike other debt securities, Global bonds’ fungibility allows them to be placed simultaneously in bond markets around the world; they trade, clear and settle efficiently within as well as across markets. We test the impact of issuing these securities on firms’ cost of capital, issuing costs, liquidity and shareholder wealth. Using a sample of 230 Global bond issues by 94 companies from the U.S. and abroad over the period 1996-2003, we find that firms are able to lower their cost of (debt) capital by issuing these fungible securities. We also document that the stock price reaction to the announcement of Global bond issuance is positive and significant, while comparable domestic and Eurobond issues over the same time period are associated with insignificant changes in shareholder wealth. JEL Classification: F3, G1, G3cost of capital, Global bonds, international capital raising, security fungibility

Polytropic spheres in Palatini f(R) gravity

We examine static spherically symmetric polytropic spheres in Palatini f(R) gravity and show that no regular solutions to the field equations exist for physically relevant cases such as a monatomic isentropic gas or a degenerate electron gas, thus casting doubt on the validity of Palatini f(R) gravity as an alternative to General Relativity.Comment: Talk given by EB at the 30th Spanish Relativity Meeting, 10 - 14 September 2007, Tenerife (Spain). Based on arXiv:gr-qc/0703132 and arXiv:0712.1141 [gr-qc

A no-go theorem for polytropic spheres in Palatini f(R) gravity

Non-vacuum static spherically-symmetric solutions in Palatini f(R) gravity are examined. It is shown that for generic choices of f(R), there are commonly-used equations of state for which no satisfactory physical solution of the field equations can be found within this framework, apart from in the special case of General Relativity, casting doubt on whether Palatini f(R) gravity can be considered as giving viable alternatives to General Relativity.Comment: 7 pages, 1 figure. Version accepted for publication as a Fast Track Communication in CQ

The Impact of Antitrust

The functions of the antitrust laws have never been well articulated. Some proponents of the law emphasize the economic benefits of competition, i.e., incentives to economic efficiency and growth. Others emphasize the political and social advantages of minimizing the concentration of economic power. A review of the history and present status of antitrust suggests that both these views play a part. The Sherman Act prohibitions of restraint of trade and monopolizing suggest concern that entry into an industry shall not be barred by arbitrary restraints and that decisions of various firms shall be arrived at independently. This is not the same as requiring competition in the economist\u27s sense, whether perfect competition or monopolistic competition with free entry. The Robinson-Patman Act, Fair Trade Laws, Judge Learned Hand\u27s decision in the Alcoa case and the Celler Anti-Merger Amendments to section 7 of the Clayton Act all indicate concern for the social and political effects of protecting the weak against the strong and perpetuating several firms in an industry, even at the expense of economic efficiency. No one can understand the role of antitrust policy in the United States without understanding the interplay of these two objectives