Peer-Reviewed Journal Details
Mandatory Fields
Mitton, T., and T. O'Connor.
2012
November
European Financial Management
Investability and Firm Value
Published
6 ()
Optional Fields
STOCK-MARKET LIBERALIZATION FINANCIAL LIBERALIZATION EQUITY VALUATION GROWTH PERFORMANCE CONSTRAINTS INFORMATION INVESTMENT FRAMEWORK
18
731
761
We study how investability, or openness to foreign equity investors, affects firm value in a sample of over 1,400 firms from 26 emerging markets. We find that, on average, investability is associated with a 9% valuation premium (as measured by Tobin's q). This significant valuation premium persists in firm-fixed effects regressions, although the magnitude and robustness of the premium is somewhat lower. Analysis of the components of Tobin's q shows that firms that become investable experience significant increases in both market values and physical investment. These effects are strongest for firms that face country-level or firm-level financial constraints prior to becoming investable.
HOBOKEN
1354-7798
10.1111/j.1468-036X.2010.00573.x
Grant Details