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The going public decision and the structure of equity markets

Author

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  • Astudillo, Alfonso
  • Braun, Matías
  • Castañeda, Pablo

Abstract

The industries in which listed firms are concentrated in less developed equity markets are not random, nor entirely explained by the underlying composition of production. Listed firms and market capitalization are disproportionately concentrated in industries with low beta (measured with their beta with the market portfolio in the U.S.). We document a strong positive relationship between the industry-weighted country beta and the degree of market development across countries. Recent IPO activity confirms the result since new listings have higher betas than the average firm already in the market.

Suggested Citation

  • Astudillo, Alfonso & Braun, Matías & Castañeda, Pablo, 2011. "The going public decision and the structure of equity markets," Journal of International Money and Finance, Elsevier, vol. 30(7), pages 1451-1470.
  • Handle: RePEc:eee:jimfin:v:30:y:2011:i:7:p:1451-1470
    DOI: 10.1016/j.jimonfin.2011.06.019
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    Cited by:

    1. Braun, Matías, 2014. "The structure of equity markets across countries: Scarcity and stock valuations," Finance Research Letters, Elsevier, vol. 11(4), pages 385-397.
    2. Gupta, Manu & Prakash, Puneet & Rangan, Nanda K., 2013. "Equity issue-specific versus broad regulatory protections against expropriation risk: International evidence from SEOs," Journal of International Money and Finance, Elsevier, vol. 35(C), pages 146-166.

    More about this item

    Keywords

    Risk sharing; Development of financial markets; Composition of equity markets;

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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