Financial Development, Internationalisation and Firm Value

44 Pages Posted: 9 Jan 2011

See all articles by Thomas O’Connor

Thomas O’Connor

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

Date Written: January 9, 2011

Abstract

In this paper I show that both aspects of financial development, namely liberalisation and deepening, and financial internationalisation proxied using cross listings in the U.S. creates value for emerging market firms. Financial deepening, or more precisely, stock market deepening enhances value. In contrast, bank sector deepening only serves to reduce value, because it is associated with large-scale corporate expansion and a fall in market capitalisations. Like others, I document a cross-listing premium for Level 2/3 cross-listings in the U.S. The cross-listing premium is typically less than the gains from financial liberalisation, but they are similar in magnitude over the period examined.

Keywords: Financial Liberalisation, Financial Deepening, Internationalisation, Tobin’s q

JEL Classification: G15, F36

Suggested Citation

O'Connor, Thomas, Financial Development, Internationalisation and Firm Value (January 9, 2011). Available at SSRN: https://ssrn.com/abstract=1737284 or http://dx.doi.org/10.2139/ssrn.1737284

Thomas O'Connor (Contact Author)

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

County Kildare
Ireland

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