Abstract
ABSTRACT Using firm-level panel data this paper examines whether degree of internationalization (DOI) matters for cost of financing for U.S. firms. The results suggest that there is a U-shaped relationship between cost of capital and DOI: at the early stage of internationalization, the cost of capital decreases with internationalization. When the degree of internationalization reaches a certain point, however, cost of capital will start increasing with internationalization. Our study also demonstrates that the U-shaped relationship also holds for cost of equity and cost of debt. This may be a reflection that stock investors and creditors don’t always value more internationalization. Investors perceive an optimal firm DOI. Keywords Internationalization; Cost of capital; Cost of equity; Cost of debt
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