Market Segmentation and Stock Prices: Evidence from an Emerging Market
The authors examine the relationship between stock prices and market segmentation induced by ownership restrictions in Mexico. The focus is on multiple classes of equity that differentiate between foreign and domestic traders, and between domestic individuals and institutions. Significant stock price premia are documented for shares not restricted to a particular investor group. The authors analyze the theoretical and empirical determinants of premia across firms and over time. In addition to economywide factors, segmentation reflects the relative scarcity of unrestricted shares. The results provide additional support for Rene Stulz and Walter Wasserfallen's (1995) hypothesis that firms discriminate between investor groups with different demand elasticities. Copyright 1997 by American Finance Association.
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Volume (Year): 52 (1997)
Issue (Month): 3 (July)
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