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    Investability and Firm Value

    Mitton, Todd and O'Connor, Thomas G. (2012) Investability and Firm Value. European Financial Management, 18 (5). pp. 731-761. ISSN 1354-7798

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    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 firmlevel financial constraints prior to becoming investable.

    Item Type: Article
    Keywords: financial liberalisation; investability; foreign investors; Tobin’s q;
    Academic Unit: Faculty of Social Sciences > Economics, Finance and Accounting
    Item ID: 8836
    Identification Number:
    Depositing User: Thomas G. O'Connor
    Date Deposited: 20 Sep 2017 09:33
    Journal or Publication Title: European Financial Management
    Publisher: Wiley
    Refereed: Yes
    Use Licence: This item is available under a Creative Commons Attribution Non Commercial Share Alike Licence (CC BY-NC-SA). Details of this licence are available here

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