Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/84271
Authors: 
Fernández, Roque B.
Pernice, Sergio
Streb, Jorge M.
Year of Publication: 
2007
Series/Report no.: 
Serie Documentos de Trabajo, Universidad del CEMA: Área: economía y finanzas 348
Abstract: 
Conventional theory leads to expect bonds to be a financing vehicle for large firms because of economies of scale and contracting costs. We find both in our econometric evidence for firms quoted on Latin American stock exchanges, and in our survey results for Argentina, that size of assets is a robust determinant of the use of bond finance. This result, together with the fact that there are few firms that are large in terms of market value, can help understand why Argentina, as well as Latin America, has small bond markets in terms of the ratio of the stock of bonds to GDP. Since firm value represents the present value of the cash flows against which the firm borrows, the outstanding stock of corporate bonds is as small as the size of Argentine firms.
Subjects: 
debt structure
leverage
short term debt
corporate bonds
firm size
firm value
JEL: 
G3
E6
Document Type: 
Working Paper

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