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    Investability and Firm Value. Department of Economics, Finance & Accounting Working paper series N192/05/08


    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 (Unpublished)

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    Abstract

    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.

    Item Type: Other
    Keywords: Financial liberalization; Investability; Foreign investors; Tobins q;
    Academic Unit: Faculty of Social Sciences > Economics, Finance and Accounting
    Item ID: 1008
    Depositing User: Ms Sandra Doherty
    Date Deposited: 20 May 2008
    Publisher: National University of Ireland Maynooth
    Refereed: No
    URI:

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