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How institutional development news moves an emerging market

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  • Guzmán, Alexander
  • Mehrotra, Vikas
  • Morck, Randall
  • Trujillo, María-Andrea

Abstract

Major moves in Colombia’s stock market in the 2000s correspond to major news of progress or setbacks in rebuilding the country’s institutions, shattered by widespread guerrilla insurgencies in the 1990s. This contrasts with prior work reporting no news on major market moves in the US, a country with comparatively stable institutions. Colombian economy-level news during the institutional rebuilding phase may have been exceptionally economically significant. This suggests that stock market moves might usefully gauge the importance of institutional changes in other developing economies.

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  • Guzmán, Alexander & Mehrotra, Vikas & Morck, Randall & Trujillo, María-Andrea, 2020. "How institutional development news moves an emerging market," Journal of Business Research, Elsevier, vol. 112(C), pages 300-319.
    • Handle: RePEc:eee:jbrese:v:112:y:2020:i:c:p:300-319
    DOI: 10.1016/j.jbusres.2019.10.009
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    Cited by:

    1. González, Maximiliano & Guzmán, Alexander & Tellez-Falla, Diego F. & Trujillo, María Andrea, 2021. "Determinants of corporate tone in an initial public offering: Powerful CEOs versus well-functioning boards," Research in International Business and Finance, Elsevier, vol. 58(C).

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    More about this item

    Keywords

    Market efficiency; Noise trading; Institutions; Economic development;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • N26 - Economic History - - Financial Markets and Institutions - - - Latin America; Caribbean
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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