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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 (Unpublished)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 |
| Related URLs: | |
| URI: | https://mural.maynoothuniversity.ie/id/eprint/1008 |
| 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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