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Where do firms issue debt? An empirical analysis of issuer location and regulatory competition in Europe

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  • Eidenmüller, Horst
  • Engert, Andreas
  • Hornuf, Lars

Abstract

In this article, we study the choice of issuer location and regulatory competition in the European corporate debt market. We find that, in absolute terms, Germany has by far the highest outflow of debt issues, while the Netherlands, the UK, Ireland, and Luxembourg see the most inflows (in that order). We use a panel gravity model to investigate country specific factors attracting foreign subsidiaries as issuers. The data clearly support the prediction that the locational choice is positively influenced by a low withholding tax rate. We find only mixed evidence that corporate tax rates play a role. In contrast to previous results of the ‘law and finance’ literature, we do not find support for creditor protection rules in bankruptcy as a driver of cross-border debt securities issues.

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  • Eidenmüller, Horst & Engert, Andreas & Hornuf, Lars, 2015. "Where do firms issue debt? An empirical analysis of issuer location and regulatory competition in Europe," International Review of Law and Economics, Elsevier, vol. 41(C), pages 103-115.
    • Handle: RePEc:eee:irlaec:v:41:y:2015:i:c:p:103-115
    DOI: 10.1016/j.irle.2014.10.007
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    2. Engert, Andreas & Hornuf, Lars, 2018. "Market standards in financial contracting: The Euro’s effect on debt securities," Journal of International Money and Finance, Elsevier, vol. 85(C), pages 145-162.

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    More about this item

    Keywords

    Debt securities; External finance; Regulatory competition; Tax competition; Multinational corporations;
    All these keywords.

    JEL classification:

    • K12 - Law and Economics - - Basic Areas of Law - - - Contract Law
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation

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