Are There Permanent Valuation Gains from Becoming Investable?
14 Pages Posted: 9 Jan 2011
Date Written: January 9, 2011
In this paper, I examine whether the “investable premium” documented by Mitton and O’Connor (2010) is permanent. In a series of firm-fixed effects regressions, I show that the “investability premium” disappears after five years of becoming investable, but subsequently reappears, and appears permanent. At the very least, the “investable premium” tends to last at least as long as some other “internationalization premia” documented in the literature, and remains even after 12 years of becoming investable. The premium persists, even after controlling for observable and unobservable firm-level characteristics, industry growth, and indirect investability.
Keywords: Investability, Tobin’s q, Internationalization
JEL Classification: G15, F36
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