Stock market development and firm financing choices

by AslД± DemirgГјГ§-Kunt

Publisher: World Bank, Policy Research Dept., Finance and Private Sector Development Division in Washington, DC

Written in English
Published: Pages: 43 Downloads: 63
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Places:

  • Developing countries.

Subjects:

  • Stock exchanges -- Developing countries.,
  • Banks and banking -- Developing countries.,
  • Stock exchanges.,
  • Banks and banking.

Edition Notes

StatementAsli Demirgüç-Kunt, Vojislav Maksimovic.
SeriesPolicy research working paper ;, WPS 1461, Policy research working papers ;, 1461.
ContributionsMaksimovic, Vojislav, 1955-
Classifications
LC ClassificationsHG3881.5.W57 P63 no. 1461
The Physical Object
Pagination43 p. :
Number of Pages43
ID Numbers
Open LibraryOL886131M
LC Control Number95174941

The use of private flows of capital and stock market creation began to shape into a new theory of development put forward by the World Bank's World Development Report for Foreign investors should have access to “well-regulated” financial markets which would provide the “surest path” to economic development.   Business & Finance of over , results for Books: New, Used & Rental Textbooks: Business & Finance How to Day Trade for a Living: A Beginner’s Guide to Trading Tools and Tactics, Money Management, Discipline and Trading Psychology. the securities market (more brokerage firms and other financial service providers needed in the securities market), providing an alternative to savers and supporting privatization of state owned 4 Debt refers to funds that a firm borrows and is obliged to pay back and this is usually obtained from banks, individuals and other lending by: 6.   The Brazilian-American firm (AUM of $ billion) holds , shares worth about $ million within its 3G Capital Partners hedge fund; it's third largest among the fund’s stock picks after.

CORPORATE FINANCING AND INVESTMENT DECISIONS WHEN FIRMS HAVE INFORMATION THAT INVESTORS DO NOT HAVE Stewart C. Myers and Nicholas S. Majluf ABSTRACT This paper considers a firm that must issue common stock to raise cash to undertake a valuable investment opportunity. Management is assumed to know more about the firm's .   This investor only buys stocks that adhere to Christian values so he left his job as an equity analyst at an RIA firm and started Three Nine Financial in Blue Springs, Mo. Why the stock. In calculating the proportional amount of equity financing employed by a firm, we should use: the common stock equity account on the firm's balance sheet. the sum of common stock and preferred stock on the balance sheet. the book value of the firm. the current market price per share of common stock times the number of shares outstanding. 4. Keywords: access to finance, bond markets, capital market development, capital raisings, financial constraints, firm dynamics, firm financing, stock markets a World Bank, b University of California at Berkeley, c NBER * The authors are grateful to Lucas Núñez and Juan Jose Cortina for truly outstanding research assistance. We received.

financial market development on the financing choices of listed firms in Ghana. The paper contributes to the existing literature in a number of ways: first, it extends the existing empirical literature by examining whether banking sector and stock market act as complements or substitutes in financing decisions of listed firms in a.   The stock market consists of exchanges or OTC markets in which shares and other financial securities of publicly held companies are issued and traded. more Bitcoin Exchange Definition.

Stock market development and firm financing choices by AslД± DemirgГјГ§-Kunt Download PDF EPUB FB2

This article empirically analyzes the effects of stock market development on firms' financing choices using data from thirty developing and industrial countries from to The results imply that initial improvements in the functioning of a developing stock market produce a higher debt-equity ratio for firms and thus more business for by: The authors empirically analyze the association between firm financing choices and the level of development of financial markets in 30 countries for the period For developed markets in the sample, further stock market development leads to a substitution of equity for debt financing.

In developing markets, by contrast, large firms become more leveraged as the stock market develops, whereas the smallest firms appear not to be significantly affected by market development.

Stock market development and firm financing choices (English) Abstract. The authors empirically analyze the association between firm financing choices and the level of development of financial markets in 30 countries for the period For the whole sample, there is a statistically significant negative correlation between Cited by: stock market development because they think that stock markets will reduce the volume of their business.

This article empirically analyzes the effects of stock market development on firms' financing choices using data from thirty developing and in-dustrial countries from to The results imply that initial improvements in.

This article empirically analyzes the effects of stock market development on firms' financing choices using data from thirty developing and industrial countries from to The results imply that initial improvements in the functioning of a developing stock market produce a higher debt-equity ratio for firms and thus more business for by: CiteSeerX - Document Details (Isaac Councill, Lee Giles, Pradeep Teregowda): This paper attempts to empirically investigate the link between stock market development and firms ’ capital structure, an often overlooked relationship in finance theory, for the case of 38 firms listed on the stock exchange of Mauritius (SEM) for the period This paper attempts to empirically investigate the link between stock market development and firms' capital structure, an often overlooked relationship in finance theory, for the case of 38 firms listed on the stock exchange of Mauritius (SEM).

Stock market development and firm financing choices book Market Development and Financing Choices Of firms: Case Study of A SIDS. debt or equity. How does stock market development affect the financing choices of firms. And how does it affect banks in developing countries. Debt or equity.

Finance theory tells us that, in the absence of bankruptcy costs, corporate income taxation, or other market imperfec-tions, the value of a firm is independent of its financial Size: KB.

The authors empirically analyze the association between firm financing choices and the level of development of financial markets in 30 countries for the period For the whole sample, there is a statistically significant negative correlation between stock market development, as measured by the ratio of market capitalization to gross Author: Asli Demirguc-Kunt and Vojislav Maksimovic.

Stock market development and firm financing choices. Washington, D.C.: World Bank, Policy Research Dept., Finance and Private Sector Development Division, [] (OCoLC) Get this from a library. Stock market development and firm financing choices. [Aslı Demirgüç-Kunt; Vojislav Maksimovic; World Bank.

Policy Research Department. Finance and Private Sector Development Division.] -- Are banks and stock markets complements or substitutes. Results imply that initial improvements in the functioning of a developing stock market produce a.

financing choices of the firm and the level of development of financial markets in thirty developed and developing economies for the period The finance literature suggests that stock markets serve important functions even in those economies in which there already exists a well developed banking Size: 1MB.

The first is whether the firms' reliance on internal funds for investment has decreased in the more financially open period of the s relative to the s and, thus, whether investment has been more responsive to changes in the q-value of the firm.

The second examines whether financial liberalization and the development of the banking. Downloadable. The authors empirically analyze the association between firm financing choices and the level of development of financial markets in 30 countries for the period For the whole sample, there is a statistically significant negative correlation between stock market development, as measured by the ratio of market capitalization to gross domestic product.

A few recent studies have considered the debate on debt–equity financing and economic development. 7 One such study by Demirguc-Kunt and Maksimovic () empirically explores the effect of the financial markets, and particularly stock market development, on the financing choice of firms.

While Demirguc-Kunt and Maksimovic's attempt to Cited by: In many developing countries with emerging stock markets, banks are fearful of stock market development because they think that stock markets will reduce the volume of their business.

This article empirically analyzes the effects of stock market development on firms' financing choices using data from thirty developing and industrial countries from to   Abstract. This study attempts to extend knowledge of the role of financial market development in the financing choice of firms in developing countries using cross-sectional regression estimator with a dynamic-panel approach for firms listed on the three emerging countries during the period Author: Najeb Masoud.

More specifically, we analyze whether the relation between firms’ financing choices and firms’ characteristics differs across financial systems. Additionally, we study whether the effects of integration and financial crises on firms’ financing ratios are different in bank-based and market-based Size: KB.

Stock market is an indicator of an economy financial health. It indicates the mood of investors in a country. As such, stock market development is an important ingredient for growth.

debate on debt-equity financing and economic development7. One such study by Demirguc-Kunt and Maksimovic () empirically explores the effect of the financial markets, and particularly stock market development, on the financing choice of firms.

While Demirguc-Kunt and Maksimovic’s attempt to include developing countries is. Capital Market Development: Taking Stock 1. Introduction The state of capital markets looks particularly poor when we consider the efforts already undertaken to improve the macroeconomic environment and reform the institutions believed to foster financial development.

In the case of. The first ETF (VTI) gives you exposure to basically the entire U.S. stock market by investing in over 4, stocks. The second ETF (VXUS) fills in the. Rajan and Zingales () examine the effect of the development of financial institutions on industry growth in a sample of countries, and Demirgüç-Kunt and Maksimovic () explore complementarities in stock market and banking-sector development on the financing decision of firms in a cross-country sample of firms, but neither paper Cited by: The authors also reported that stock market development Granger-causes economic growth.

The study by Muhammad et al () suggested that there is a long-run relationship between stock market development and economic growth. Liu and Hsu () reported a positive impact on economic growth of stock market development in Taiwan, Korea and Japan.

that what should be the actual impact of firms performance on stock returns. For that purpose the Furthermore, firms with low book to market ratio, efficient working capital management, more equity and less liabilities, low total assets, and high EBIT margin between financial ratio and stock returns in Indonesia.

The market capitalization of a public company is $5 billion. Each share of the company is traded at $ What do you infer from this financial data. A) The firm's number of outstanding shares is 25 million.

B) The firm pays an annual dividend of 10 percent. C) The firm's total return to shareholder is $5 billion. liquidity. The impact of these factors on stock market development in emerging markets was then tested using an empirical model (Equation 2). FDI, savings, economic growth, trade openness, exchange rates, banking sector development and stock market liquidity to a larger extent had a positive impact on stock market development in emerging by: 1.

the external investors about the firm operations, assets and value of the firm. When information asymmetry is larger, then the firm issues debts. If they issue shares, the stock prices would fall more due to this asymmetry.

So current shareholders would prefer the debts financing in order to avoid the under-pricing of the stock prices. b) a firm issues new shares of stock and uses the proceeds from the sale to retire its outstanding debt c) a firm borrows money at 8% and earns an 11% return on its investment of these funds d) a firm attracts the interest of two venture capitalists, and plays one .The market price of a share of common stock is determined by: the board of directors of the firm.

the stock exchange on which the stock is listed. the president of the company. individuals buying and selling the stock. 6. The focal point of financial management in a firm is: the number and types of products or services provided by the firm.3 Fo r empirica l evidence, see fo instance Asquith and Mullins (); a development of these theoretica arguments see Greenwald et al.

() or Myers and Majluf (). 4 Manager s also ofte n tak e action which ar directed mor at their ow welfar tha th firms', e.g. acquisitio of knowledge and skills which improves their market position.