Insight

Capital effort

Researchers study if big-ticket firms with investing heft manage to raise capital even in a downturn

Just like your credit rating affects the chances of banks loaning cash to you, several macroeconomic conditions affect firms’ ability to raise capital, especially when the markets are on their way down. Studying a wide selection of debt issues, equity offers and loans, researchers Isil Erel, Brandon Julio, Woojin Kim and Michael S Weisbach found that big-ticket firms with investing heft will manage to raise capital even in a downturn, while smaller players only succeed during bull runs.

 

Title: Macroeconomic Conditions and Capital Raising

Source: The National Bureau of Economic Research

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