NUI Maynooth

NUI Maynooth ePrints and eTheses Archive

NUIM Library

Investability and Frim Value

O'Connor, Dr. Thomas and Mitton, Dr Todd (2008) Investability and Frim Value. .

[img]PDF - Requires a PDF viewer such as GSview, Xpdf or Adobe Acrobat Reader
268Kb

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 Tobin’s 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 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.

Keywords:Financial liberalization; Investability; Foreign investors; Tobin’s q. *
Subjects:Social Sciences > Economics
ID Code:1008
Deposited By:Ms Sandra Doherty
Deposited On:20 May 2008
Refereed:No
URL:http://www.ideas.repec.org/s/nuim/mayecw.html, http://www.nuim.ie/academic/economics/

Repository Staff Only: item control page