یکپارچه سازی مالی بین المللی از طریق بازارهای سهام: کدام شرکت از کدام کشور جهانی می شود؟

This paper studies international financial integration analyzing firms from various countries raising capital, trading equity, and/or cross-listing in major financial markets. Using a large sample of 39,517 firms from 111 countries covering the period 1989–2000, we find that, although integration increases substantially over this period, only relatively few countries and firms actively participate. Firms more likely to internationalize are from larger and more open economies, with higher income, and better macroeconomic environments. These firms tend to be larger, grow faster, and have higher returns and more foreign sales. International financial integration will likely remain constrained by country and firm characteristics.

Financial globalization has increased significantly during the last decade. The increased integration of financial systems has involved greater cross-border capital flows, tighter links among financial markets, and greater presence of foreign financial firms around the world. Indeed, many of the standard aggregate measures of financial globalization such as gross capital flows, stocks of foreign assets and liabilities, and degree of co-movement of asset returns suggest that international financial integration has become widespread and reached unprecedented levels.2 Although these measures offer very useful insights on an aggregate basis, they provide less evidence on how extensive financial integration is, how deep it reaches, and how it comes about. For example, these measures do not tell how many firms from how many countries are actively participating in this integration process, what proportion of the corporate sector actually internationalizes, or, even more important, why firms seek to internationalize. In this paper, we complement the existing literature by studying the extent of international financial integration analyzing firms' activity in world capital markets.3 To do so, we compile new data, dividing firms into “international firms” (those that participate in international stock markets by raising capital, cross-listing, and/or issuing depositary receipts in global markets) and “domestic firms” (all other firms). With these data, we study how the participation of firms in major capital markets is related to country and firm characteristics. This way, we can address several important questions. Does the internationalization process mean that firms from all countries use international capital markets? For those countries that see some internationalization, how extensive is this process and which country characteristics matter for the degree of internationalization? Within the countries that internationalize, is it a specific subset of firms that participates in international capital markets and are these firms different ex-ante from those that do not internationalize? In addition to identifying important facts regarding the extent of international financial integration using firm-level data, our analysis also sheds light on some debates, particularly on those related to how country-level (macroeconomic) and firm-level (microeconomic) factors affect firm participation in international equity markets. At the country level, there are different views on how macroeconomic variables relate to firms' activity in international equity markets. One perspective is that worse macroeconomic conditions increase the need and desire to use international markets. Under this view, poor domestic environments are one of the main reasons for capital flight and greater use by domestic residents and firms of all types of financial services offered internationally. The literature on “bonding” specifically argues that international markets are more attractive to firms from countries with weak institutional environments since they offer the ability to “bond” firms to a system that better protects investor rights.4 Thus, while worse fundamentals may hinder the development of domestic financial markets (Levine, 2005), they may increase the use of international markets. From a different perspective, better domestic environments can increase the attractiveness of firms to investors, especially foreign ones. Foreign investors who have the ability to invest globally will generally offer larger amounts of external financing and lower cost of capital when firms' host country fundamentals improve. By listing abroad, a firm only aids to this tendency of international investors to choose firms from better countries. Therefore, under this view, better domestic fundamentals lead to more (not less) use of international capital markets. These two views on internationalization have quite different predictions. Under the first view, firms choose to go abroad and in doing so escape, at least partially, a poor domestic environment. Under the second view, however, firms from good environments are the ones that tend to go to global markets, as the suppliers of capital grant them access to international markets at attractive enough terms.5 In practice, it is hard to pin down the relative importance of these two views, but that has not deterred recent research from shedding light on aspects of this debate.6 Several papers have studied the firm-level factors related to internationalization. Similar to going public, there are many potential benefits to internationalize. Firms can attract capital at lower costs and better terms, tap into wider investor bases, and end up with more liquid securities. In fact, several papers find that international firms tend to obtain better financing opportunities, de-leverage, extend their debt maturity, and grow faster.7 Trading abroad may also enhance liquidity domestically and affect price discovery.8 In addition, by going abroad and committing to higher standards of corporate governance and/or disclosure, firms can reduce their cost of capital, both for local and international raisings (for example, Cantale, 1996, Fuerst, 1998 and Doidge et al., 2004). While most papers find that internationalization yields some benefits to firms, thus confirming some of the arguments above, the analysis regarding which firm characteristics matter ex-ante for internationalization has been scarcer (a notable exception is Pagano et al., 2002). Depending on what specific reasons motivate firms, certain firm characteristics can be expected to relate to the probability of going abroad. Firm size might play an important role to the extent that there are large fixed costs to accessing international markets. These fixed costs can derive from the need to comply with international accounting standards or the minimum market capitalization requirements to list abroad (Saudagaran, 1988). Growth opportunities may matter as firms with large unrealized growth opportunities might be more likely to internationalize (Bekaert et al., 2006). Since firms with foreign sales can pledge foreign revenues as a form of international collateral, they may be able to relax their borrowing constraint by accessing international capital markets (Caballero and Krishnamurthy, 2001 and Caballero and Krishnamurthy, 2002). Also, to the extent that international markets are more developed than domestic ones, firms with high returns on capital might be more likely to seek equity capital abroad. Finally, corporate governance measures might indicate the willingness of firms to comply with stricter investor protection regulations (Doidge et al., 2006). To analyze the participation of firms in international equity markets and its relation to country and firm characteristics, we compile a large sample of 39,517 firms from 111 countries covering the period 1989–2000. Of these firms, 2546 are international firms, accounting for a maximum of 30,552 firm-year observations. The remaining 36,971 domestic firms account for a maximum of 223,740 firm-year observations. For each firm, we collect firm-level data, such as size, growth, performance, and foreign trade activity. We also compile country-level information. Our analysis shows that only a relatively small fraction of countries and firms use international markets. Firms more likely to go abroad are located in certain countries, specifically in those with bigger economies, higher income levels, and better macroeconomic, but worse institutional environments. International firms themselves tend to be larger, grow faster, and have higher rates of return and more foreign sales. In other words, firms that internationalize tend to be drawn from a particular group of countries and seem different from other firms. The analysis in this paper improves over related previous work. The data set of firms, countries, and observations is very comprehensive and allows for a relatively complete study of international financial integration at the firm level. Additionally, we include access to more than one international financial center and different forms of internationalization (capital raising, issuing, and trading). Using a large and diverse set of countries and firms over various years, we can characterize well how both country- and firm-level factors relate to internationalization. The period 1989–2000 is also interesting because many developing countries introduced reforms (including opening up their financial systems), which was followed by years of high internationalization (up to the burst of the dotcom bubble).9 The rest of the paper is organized as follows. Section 2 describes the data and methodology. Sections 3 and 4 present, respectively, country- and firm-level summary statistics and regression results on the extent of internationalization. Section 5 concludes.

This paper has shown that the extent of international financial integration may be more limited than commonly thought. Although many countries have firms participating in international markets, much fewer countries have a non-negligible proportion of internationally active firms. Moreover, only certain firms and countries participate in international markets and both country and firm factors condition the extent of internationalization. With respect to country characteristics, more developed countries with better macroeconomic (but worse institutional) conditions and more open economies have more international firms. Regarding firm aspects, larger firms, with more foreign sales, and firms that grow faster and have higher rates of returns are more likely to go abroad. The paper could be expanded in many directions, which may enlighten several debates. First, understanding better the extent to which country and firm characteristics allow firms to go international may help design policies that increase the likelihood of firms to access global capital markets and reap the gains of lower costs and better terms. For example, it may be that firms from weaker countries can use international markets to bind themselves to higher standards of investor protection only when the country of origin has passed some hurdle of development. More broadly, the desire of firms to internationalize might only be met after country characteristics allow them to do so. And, for international financial centers, a better understanding of the drivers of internationalization will help guide their policies, including listing requirements and other regulations. In fact, recent work suggests that the benefits of listing in the United States have diminished in recent years (after our sample ends), adversely affecting the business of international stock exchanges.21 Second, more tests could be performed to deepen the analysis. For example, we did not distinguish between firms that only list or trade in international markets and those that raise capital internationally, nor between the forms of listing (cross-listing versus ADRs/GDRs). Theory suggests that similar, but not identical factors affect these choices. Also, we did not use any firm-specific governance variables, which, although difficult to collect, may be important in the going abroad decision if firms try to bind themselves to higher corporate governance standards. Firms can bind through other means as well, however, such as having certain ownership structures or (more) independent directors, hiring better accountants, and so forth. Whether these voluntary mechanisms alone are effective in less developed countries and whether internationalization serves as a complement or substitute corporate governance tool is an important research and policy issue. A third area of possible extensions relates to the finding that only few countries and certain firms participate in international markets and gain from internationalization. More research can help understand whether firms that do not have direct links to international financial markets obtain positive or negative spillovers from other firms accessing international financial markets and what the associated welfare effects may be. Positive spillovers might occur if the benefits reaped by international firms get transmitted to domestic firms, for example, through freeing up domestic financing or creating more integrated financial markets. Negative spillovers can be present when internationalization adversely affects domestic market development, especially market liquidity.22