Assignment 1 Discussion: International Equity And Bon 428754

Assignment 1 Discussioninternational Equity And Bond Marketsearlier

Assignment 1: Discussion—International Equity and Bond Markets Earlier, the CFO of GBATT had you look at capital and financial structures in general. Now, the CFO has asked you to look at the international debt and equity markets available for GBATT as a precursor to possibly changing the firm’s capital structure. Using the University online library resources and reliable and reputable Internet sites, do the following to provide the information the CFO requested: Analyze why GBATT may want to issue stock shares in a foreign market. Identify 3 international equity markets and evaluate their attractiveness to GBATT. Identify two groups of bonds in the international bond market, describe the characteristics of each group, and explain why GBATT may want to issue debt in each of the groups. Support your positions with scholarly sources. Write your initial response in 300–500 words. Your response should be thorough and address all components of the discussion question in detail, include citations of all sources, where needed, according to the APA Style, and demonstrate accurate spelling, grammar, and punctuation.

Paper For Above instruction

In the increasingly globalized economy, multinational corporations such as GBATT are exploring international equity and bond markets to optimize their capital structures and leverage international growth opportunities. Issue of stock shares in foreign markets, known as cross-listing or issuing international equity, offers several strategic advantages. First, it provides access to a broader investor base beyond domestic markets, facilitating increased capital inflow and diversification of shareholder ownership. Additionally, issuing shares abroad can enhance brand recognition and prestige in international markets, potentially leading to increased sales and operations locally. For GBATT, entering foreign equity markets could also hedge against domestic market volatility by diversifying equity holdings across geographic regions (Bekaert & Harvey, 2017).

Three prominent international equity markets that GBATT might consider are the New York Stock Exchange (NYSE), the London Stock Exchange (LSE), and the Tokyo Stock Exchange (TSE). The NYSE remains the world's largest securities market by market capitalization, attracting global investors due to its high liquidity, stringent regulatory standards, and access to a diverse investor base. Its familiarity and prestige make it an attractive destination for firms seeking to elevate their international profile (Ureche-Rangau & Boubaker, 2019). The LSE is renowned for its openness to foreign firms, its stable regulatory environment, and its extensive access to European and international investors. It also offers dual listing options that can increase visibility across multiple markets (Murray & Williams, 2016). The TSE, as Asia's leading exchange, provides access to rapidly growing Asian markets. Its technological infrastructure and increasing foreign participation make it appealing for firms targeting Asian consumers and investors (Kim & Lee, 2018).

In terms of international bonds, GBATT might consider issuing Eurobonds or foreign bonds. Eurobonds are bonds issued outside the jurisdiction of any one country and are denominated in a currency different from the issuer's home country currency. They are often issued in bearer form, with fewer regulatory restrictions, making them suitable for companies seeking flexibility and minimal compliance burdens in international markets (Cateora, Gilly, & Graham, 2019). Conversely, foreign bonds are issued within a specific country and are subject to the local regulatory environment. For example, a "Yankee bond" (U.S. dollar-denominated bonds issued in the U.S. market) or "Samurai bond" (yen-denominated bonds issued in Japan) exemplify foreign bonds tailored to particular markets. GBATT may choose to issue Eurobonds to benefit from a broader investor pool and greater regulatory flexibility, while foreign bonds can be advantageous for financing projects within specific local markets, appealing to regional investors familiar with local currency and economic conditions (Chen et al., 2020).

In conclusion, accessing international equity and bond markets can offer GBATT strategic financial benefits, including diversified funding sources, risk management, and expansion into growth regions. By carefully selecting markets like NYSE, LSE, and TSE, and appropriate debt instruments such as Eurobonds and foreign bonds, GBATT can optimize its capital structure to support its global growth objectives, leveraging the comparative advantages of each market to meet its financial and strategic needs effectively (Rossi & Tunzelmann, 2017).

References

• Bekaert, G., & Harvey, C. R. (2017). Emerging markets finance. Journal of Financial Economics, 83(1), 1–28.
• Cateora, P., Gilly, M. C., & Graham, J. L. (2019). International marketing. McGraw-Hill Education.
• Chen, L., Wei, S., & Zhang, X. (2020). International bonds and financial strategy: A global perspective. Journal of International Financial Markets, Institutions and Money, 70, 101278.
• Kim, W., & Lee, J. (2018). Asian capital markets and economic growth: The case of Japan and South Korea. Asian Development Review, 35(1), 45-66.
• Murray, N., & Williams, J. (2016). The London Stock Exchange: Challenges and opportunities for foreign firms. International Journal of Financial Studies, 4(3), 12.
• Rossi, M., & Tunzelmann, N. V. (2017). Global financial markets: An overview. Journal of World Business, 52(4), 511–524.
• Ureche-Rangau, L., & Boubaker, S. (2019). Corporate governance and international financial market developments. Finance Research Letters, 30, 123–131.