Macroeconomic Conditions and Capital Raising
Do macroeconomic conditions affect firms' abilities to raise capital? If so, how do they affect the manner in which the capital is raised? Using a large sample of publicly traded debt issues, seasoned equity offers, bank loans, and private placements of equity and debt, we find that a borrower's credit quality significantly affects its ability to raise capital during macroeconomic downturns. For noninvestment-grade borrowers, capital raising tends to be procyclical, while for investment-grade borrowers, it is countercyclical. Poor market conditions also affect the structure of securities offered, shifting them toward shorter maturities and more security. Overall, our results suggest that macroeconomic conditions influence the securities that firms issue to raise capital, the way in which these securities are structured, and indeed firms' ability to raise capital at all. The Author 2011. Published by Oxford University Press on behalf of The Society for Financial Studies. All rights reserved. For Permissions, please e-mail: firstname.lastname@example.org., Oxford University Press.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 25 (2012)
Issue (Month): 2 ()
|Contact details of provider:|| Postal: |
Web page: http://www.rfs.oupjournals.org/Email:
More information through EDIRC
|Order Information:||Web: http://www4.oup.co.uk/revfin/subinfo/|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Mark Gertler & Simon Gilchrist, 1993.
"Monetary policy, business cycles and the behavior of small manufacturing firms,"
Finance and Economics Discussion Series
93-4, Board of Governors of the Federal Reserve System (U.S.).
- Gertler, Mark & Gilchrist, Simon, 1994. "Monetary Policy, Business Cycles, and the Behavior of Small Manufacturing Firms," The Quarterly Journal of Economics, MIT Press, vol. 109(2), pages 309-40, May.
- Gertler, M. & Gilchrist, S., 1992. "Monetary Policy, Business Cycles and the Behavior of Small Manufacturing Firms," Working Papers 92-08, C.V. Starr Center for Applied Economics, New York University.
- Mark Gertler & Simon Gilchrist, 1991. "Monetary Policy, Business Cycles and the Behavior of Small Manufacturing Firms," NBER Working Papers 3892, National Bureau of Economic Research, Inc.
- Gertler, M. & Gilchrist, S., 1993. "Monetary Policy, Business Cycles and the Behavior of Small Manufacturing Firms," Working Papers 93-02, C.V. Starr Center for Applied Economics, New York University.
- Chemmanur, Thomas J & Fulghieri, Paolo, 1994.
"Reputation, Renegotiation, and the Choice between Bank Loans and Publicly Traded Debt,"
Review of Financial Studies,
Society for Financial Studies, vol. 7(3), pages 475-506.
- Chemmanur, T.J. & Fulghieri, P., 1992. "Reputation, Renegotiation, and the Choice Between Bank Loans and Publicity Traded Debt," Papers 92-24, Columbia - Graduate School of Business.
- Dimitri Vayanos, 2004.
"Flight to Quality, Flight to Liquidity, and the Pricing of Risk,"
NBER Working Papers
10327, National Bureau of Economic Research, Inc.
- Dimitri Vayanos, 2004. "Flight to quality, flight to liquidity, and the pricing of risk," LSE Research Online Documents on Economics 456, London School of Economics and Political Science, LSE Library.
- Kim, Woojin & Weisbach, Michael S., 2008.
"Motivations for public equity offers: An international perspective,"
Journal of Financial Economics,
Elsevier, vol. 87(2), pages 281-307, February.
- Woojin Kim & Michael S. Weisbach, 2005. "Motivations for Public Equity Offers: An International Perspective," NBER Working Papers 11797, National Bureau of Economic Research, Inc.
- Malcolm Baker, 2009. "Capital Market-Driven Corporate Finance," Annual Review of Financial Economics, Annual Reviews, vol. 1(1), pages 181-205, November.
- Dittmar, Amy K. & Dittmar, Robert F., 2008. "The timing of financing decisions: An examination of the correlation in financing waves," Journal of Financial Economics, Elsevier, vol. 90(1), pages 59-83, October.
- Sudheer Chava & Michael R. Roberts, 2008. "How Does Financing Impact Investment? The Role of Debt Covenants," Journal of Finance, American Finance Association, vol. 63(5), pages 2085-2121, October.
- Joshua D. Rauh & Amir Sufi, 2008.
"Capital Structure and Debt Structure,"
NBER Working Papers
14488, National Bureau of Economic Research, Inc.
- Almeida, Heitor & Campello, Murillo & Weisbach, Michael S., 2011.
"Corporate financial and investment policies when future financing is not frictionless,"
Journal of Corporate Finance,
Elsevier, vol. 17(3), pages 675-693, June.
- Heitor Almeida & Murillo Campello & Michael S. Weisbach, 2006. "Corporate Financial and Investment Policies when Future Financing is not Frictionless," NBER Working Papers 12773, National Bureau of Economic Research, Inc.
- Almeida, Heitor & Campello, Murillo & Weisbach, Michael S., 2008. "Corporate Financial and Investment Policies When Future Financing Is Not Frictionless," Working Paper Series 2008-16, Ohio State University, Charles A. Dice Center for Research in Financial Economics.
- Repullo, Rafael & Suarez, Javier, 1999.
"Entrepreneurial Moral Hazard and Bank Monitoring: A Model of the Credit Channel,"
CEPR Discussion Papers
2060, C.E.P.R. Discussion Papers.
- Repullo, Rafael & Suarez, Javier, 2000. "Entrepreneurial moral hazard and bank monitoring: A model of the credit channel," European Economic Review, Elsevier, vol. 44(10), pages 1931-1950, December.
- Rafael Repullo & Javier Suarez, 1999. "Entrepreneurial moral hazard and bank monitoring: a model of the credit channel," Discussion Paper / Institute for Empirical Macroeconomics 129, Federal Reserve Bank of Minneapolis.
- Repullo,R. & Suarez,J., 1996. "Entrepreneurial Moral Hazard and Bank Monitoring: A Model of the Credit Channel," Papers 9604, Centro de Estudios Monetarios Y Financieros-.
- Jo�O A. C. Santos & Andrew Winton, 2008. "Bank Loans, Bonds, and Information Monopolies across the Business Cycle," Journal of Finance, American Finance Association, vol. 63(3), pages 1315-1359, 06.
- Flannery, Mark J, 1986. " Asymmetric Information and Risky Debt Maturity Choice," Journal of Finance, American Finance Association, vol. 41(1), pages 19-37, March.
- Korajczyk, Robert A. & Levy, Amnon, 2003. "Capital structure choice: macroeconomic conditions and financial constraints," Journal of Financial Economics, Elsevier, vol. 68(1), pages 75-109, April.
- Takeo Hoshi & Anil Kashyap & David Scharfstein, 1993. "The Choice Between Public and Private Debt: An Analysis of Post-Deregulation Corporate Financing in Japan," NBER Working Papers 4421, National Bureau of Economic Research, Inc.
- Cara S. Lown & Donald P. Morgan & Sonali Rohatgi, 2000. "Listening to loan officers: the impact of commercial credit standards on lending and output," Economic Policy Review, Federal Reserve Bank of New York, issue Jul, pages 1-16.
- Zhang, Zhipeng, 2009. "Recovery Rates and Macroeconomic Conditions: The Role of Loan Covenants," MPRA Paper 17521, University Library of Munich, Germany.
When requesting a correction, please mention this item's handle: RePEc:oup:rfinst:v:25:y:2012:i:2:p:341-376. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press)or (Christopher F. Baum)
If references are entirely missing, you can add them using this form.