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Legal protection of investors, corporate governance, and investable premia in emerging markets

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Author Info

  • Stephen Kinsella

    (Department of Economics, Kemmy Business School, University of Limerick)

  • Thomas O'Connor

    (Department of Economics, Finance and Accounting, National University of Ireland, Maynooth)

  • Vincent O'Sullivan

    (Department of Economics, Kemmy Business School, University of Limerick)

Abstract

We examine the interaction between the legal protection of investors, corporate governance within firms, institutional development between countries, and investable premia in emerging markets. In a multi country setting and using a novel dataset we find that better-governed firms experience significantly greater stock price increases upon equity market liberalization. We look to see whether well-governed firms in poorly governed countries enjoy an investability premium as measured by Tobin’s q. We find they do. Investors look beyond the seemingly weak country-level governance structures, and focus on corporate governance.

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Bibliographic Info

Paper provided by Geary Institute, University College Dublin in its series Working Papers with number 201117.

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Length: 35 pages
Date of creation: 22 Aug 2011
Date of revision:
Handle: RePEc:ucd:wpaper:201117

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Keywords: Investability; Corporate Governance; Tobin's q; Emerging Markets;

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References

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