1. Global Cost and Availability of Capital
Chapter 14
Global Cost and Availability of Capital

2. Global Cost and Availability of Capital
Global integration of capital markets has given many firms access to new and cheaper sources of funds beyond those available in their home markets.
If a firm is located in a country with illiquid, small, and/or segmented capital markets, it can achieve this lower global cost and greater availability of capital by a properly designed and implemented strategy.
Copyright © 2007 Pearson Addison-Wesley. All rights reserved.

3. Exhibit 11.1 Dimensions of the Cost and Availability of Capital Strategy
Segmented domestic securities
market that prices shares
according to domestic standards
Access to global securities market
that prices shares according to
international standards
Illiquid domestic securities market
and limited international liquidity
Firm’s securities appeal only
to domestic investors
Firm’s securities appeal to
international portfolio investors
Highly liquid domestic market and
broad international participation
Firm-Specific Characteristics
Market Liquidity for Firm’s Securities
Effect of Market Segmentation on Firm’s Securities and Cost of Capital
Local Market Access
Global Market Access
Copyright © 2007 Pearson Addison-Wesley. All rights reserved.