Browsing by Author "Schmukler, Sergio L."

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    Capital inflows, equity issuance activity, and corporate investment
    (2021) Calomiris, Charles W.; Larrain, Mauricio; Schmukler, Sergio L.
    This paper uses issuance-level data to study how equity capital inflows that enter emerging market economies affect equity issuance and corporate investment. It shows that foreign inflows are strongly correlated with country-level issuance. The relation especially reflects the behavior of large firms. To identify supply-side shocks, capital inflows into each country are instrumented with exogenous changes in other countries' attractiveness to foreign investors. Shifts in the supply of foreign capital are important drivers of increased equity inflows. Instrumented contemporaneous and lagged capital inflows lead large firms to raise new equity, which they use to fund investment.
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    Financing firms in hibernation during the COVID-19 pandemic
    (2021) Didier, Tatiana; Huneeus, Federico; Larrain, Mauricio; Schmukler, Sergio L.
    The coronavirus (COVID-19) pandemic halted economic activity worldwide, hurting firms and pushing many of them toward bankruptcy. This paper discusses four central issues that have emerged in the academic and policy debates related to firm financing during the downturn. First, the economic crisis triggered by the pandemic is radically different from past crises, with important consequences for optimal policy responses. Second, it is important to preserve firms' relationships with key stakeholders (e.g., workers, suppliers, customers, and creditors) to avoid inefficient bankruptcies and long-term detrimental economic effects. Third, firms can benefit from "hibernation," incurring the minimum bare expenses necessary to withstand the pandemic while using credit to remain alive until the crisis subdues. Fourth, the existing legal and regulatory infrastructure is ill-equipped to deal with an exogenous systemic shock like a pandemic. Financial sector policies can help channel credit to firms, but they are hard to implement and entail different trade-offs. (C) 2020 Published by Elsevier B.V.
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    Large international corporate bonds: Investor behavior and firm responses*
    (2022) Calomiris, Charles W.; Larrain, Mauricio; Schmukler, Sergio L.; Williams, Tomas
    Emerging market corporations have significantly increased their borrowing in international debt markets since 2008. We provide a detailed dive into this borrowing by showing that it happened in one particular market segment. Firms significantly increased their large bond issu-ances, mostly above US$500 million, which became cheaper to issue. We find a strong cluster-ing of issuances with a face value of exactly $500 million after 2008 compared to developed markets. This suggests increased willingness from investors, especially cross-over investors, to purchase emerging market bonds included in newly created bond indexes, which require a minimum face value of $500 million. However, not all firms could issue such large bonds. Firms large enough to do so faced a trade-off. Issuing index-eligible bonds allowed them to borrow at a lower cost at the expense of accumulating cash. Because of this "size yield dis-count," many companies increased their issuances of index-eligible bonds, accumulating cash holdings.(c) 2022 The World Bank. Published by Elsevier Ltd