Who Issues Debt Securities in Emerging Economies?

Abstract

This paper is the first to focus on firm capital market inaccessibility in emerging economies and investigate it as one of the determinants of firm debt securities issuance in emerging economies. The following results are derived from the empirical analysis. First, country panel analyses show that the debt securities market development and domestic equity market development are positively related. Second, firm panel data analyses of ASEAN countries suggest that debt securities issuers and frequent equity issuers overlap. Third, analyses of daily stock price data of ASEAN firms reveal that debt securities are not issued for infrequent equity issuers, regardless of the stock price, whereas frequent equity issuers choose debt securities issuance as a funding tool when the stock price is low. Fourth, as compared to accessible frequent equity issuers, marketinaccessible firms are less sensitive to the financial cost of debt securities issuance.