Institutions | About Us | Help | Gaeilge
rian logo


Mark
Go Back
Investability and Firm Value. Department of Economics, Finance & Accounting Working paper series N192/05/08
O'Connor, Thomas G.; Mitton, Todd
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 Tobins q). However, in firm-fixed effects regressions this valuation premium disappears, suggesting that investability does not have a causal effect on firm value. Analysis of the components of Tobins 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.
Keyword(s): Economics, Finance & Accounting; Financial liberalization; Investability; Foreign investors; Tobins q;
Publication Date:
2008
Type: Other
Peer-Reviewed: No
Institution: Maynooth University
Citation(s): O'Connor, Thomas G. and Mitton, Todd (2008) Investability and Firm Value. Department of Economics, Finance & Accounting Working paper series N192/05/08. National University of Ireland Maynooth. (Unpublished)
Publisher(s): National University of Ireland Maynooth
File Format(s): application/pdf
Related Link(s): http://mural.maynoothuniversity.ie/1008/1/N1920508.pdf
First Indexed: 2020-01-31 06:05:50 Last Updated: 2020-04-02 07:50:18