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Investment in Central and Eastern European equities: An investigation of the practices and viewpoints of practitioners


  • Calum A.J. Middleton
  • Suzanne G.M. Fifield
  • David M. Power


Purpose - The purpose of this paper is to examine the issues faced by institutional investors looking to invest in the Central and Eastern European (CEE) region. In particular, the paper seeks to ascertain the views of practitioners on the reasons for undertaking CEE investment, the structures of their investment processes for the CEE region, the barriers to CEE investment, and the future of the CEE region. Design/methodology/approach - A series of semi-structured interviews was conducted with institutional investors who had substantial knowledge and experience of investing in the CEE region. Findings - The findings indicated that funds followed a bottom-up approach whereby they researched company fundamentals and then applied a macroeconomic overview in their decision. The risks considered were not those frequently discussed in the current literature. For example, while currency risk and political risk were not seen as problematic, interviewees were concerned with liquidity problems and corporate governance issues. Finally, investors thought that the economic growth of the CEE region, together with its convergence with the EU, would create a more attractive investment environment than that available in other emerging market regions. Originality/value - The paper addresses the more qualitative aspects of CEE investment decisions, such as perceptions about the risks of acquiring shares in CEE firms, by analysing practitioner perspectives on equity investment in the region. This qualitative approach facilitates an investigation of issues which cannot be captured in quantitative analyses.

Suggested Citation

  • Calum A.J. Middleton & Suzanne G.M. Fifield & David M. Power, 2007. "Investment in Central and Eastern European equities: An investigation of the practices and viewpoints of practitioners," Studies in Economics and Finance, Emerald Group Publishing, vol. 24(1), pages 13-31, March.
  • Handle: RePEc:eme:sefpps:v:24:y:2007:i:1:p:13-31

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    References listed on IDEAS

    1. Danthine, Jean-Pierre & Donaldson, John B., 2014. "Intermediate Financial Theory," Elsevier Monographs, Elsevier, edition 3, number 9780123865496.
    2. Karl B. Diether & Christopher J. Malloy & Anna Scherbina, 2002. "Differences of Opinion and the Cross Section of Stock Returns," Journal of Finance, American Finance Association, vol. 57(5), pages 2113-2141, October.
    3. Jouini, Elyes & Napp, Clotilde, 2006. "Heterogeneous beliefs and asset pricing in discrete time: An analysis of pessimism and doubt," Journal of Economic Dynamics and Control, Elsevier, vol. 30(7), pages 1233-1260, July.
    4. repec:dau:papers:123456789/341 is not listed on IDEAS
    5. Varian, Hal R, 1985. " Divergence of Opinion in Complete Markets: A Note," Journal of Finance, American Finance Association, vol. 40(1), pages 309-317, March.
    6. Bart, John & Masse, Isidore J., 1981. "Divergence of Opinion and Risk," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 16(01), pages 23-34, March.
    7. Williams, Joseph T., 1977. "Capital asset prices with heterogeneous beliefs," Journal of Financial Economics, Elsevier, vol. 5(2), pages 219-239, November.
    8. John G. Cragg & Burton G. Malkiel, 1982. "Expectations and the Structure of Share Prices," NBER Books, National Bureau of Economic Research, Inc, number crag82-1, January.
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    Cited by:

    1. Middleton, C.A.J. & Fifield, S.G.M. & Power, D.M., 2008. "An investigation of the benefits of portfolio investment in Central and Eastern European stock markets," Research in International Business and Finance, Elsevier, vol. 22(2), pages 162-174, June.
    2. Omaima Hassan & David M. Power, 2009. "The usefulness of accounting information; evidence from the Egyptian market," Qualitative Research in Financial Markets, Emerald Group Publishing, vol. 1(3), pages 125-141, October.


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