Thursday 27 January 2011 at 17:30
Law and Finance Seminar Series
Where Do Firms Issue Debt? An Empirical Analysis of Issuer Location and Regulatory Competition in the European Corporate Debt Market
Speaker: Professor Horst Eidenmueller and Lars Hornuf, Ludwig Maximilians University of Munich
Venue: Said Business School Edmond Safra Lecture Theatre
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, Luxembourg and Ireland see the most inflows (in that order). We use a panel gravity model to investigate country specific factors attracting foreign subsidiaries as issuer. The data clearly support the prediction that the locational choice is positively influenced by a low withholding tax rate. There is also some evidence that corporate tax rates play a role. We do not find support for creditor protection rules in bankruptcy as a driver of cross-border debt securities issues. Hence, countries who wish to attract issuers are well-advised to reduce their withholding tax rates – creditor rights seem not to matter.
For more information please contact: Anne Currie
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Part of the Law and Finance Seminar Series
