Three essays on the corporate debt choice

Abstract

[ACCESS RESTRICTED TO THE UNIVERSITY OF MISSOURI AT AUTHOR'S REQUEST.] This dissertation examines the determinants of the corporate debt choice between different forms of debt financing and different countries. By examining the most extensive sample of U.S. debt issues to date, Essay 1 shows that firms that issue 144A debt are significantly different from firms that privately place non-bank debt without using the 144A rule. I also find that traditional private placements rather than bank loans are the favorite debt source for firms with good credit quality that cannot access the public market because of flotation costs and information asymmetry. Essay 2 examines how governance provisions that affect the cost of debt are related to the corporate debt choice. I find that firms with fewer takeover defenses and larger blockholder ownership are more likely to issue private debt. This result is consistent with the hypothesis that private debt claimants can reduce the expected negative impact of takeovers on debtholder value by enforcing stricter covenants or by renegotiating debt in case of takeover. Essay 3 examines the external debt financing choices of multinational firms by using a unique international dataset of firm-level debt offerings. I show that tax-based incentives, country-specific investor preferences, and difference in legal regimes across countries influence multinational firms in their debt location choice.