Legal Protection of Investors, Corporate Governance, and Investable Premia in Emerging Markets

34 Pages Posted: 16 Jan 2012

See all articles by Thomas O’Connor

Thomas O’Connor

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

Stephen Kinsella

University of Limerick

K.P.V. O'Sullivan

University of Limerick- Kemmy Business School

Date Written: January 15, 2012

Abstract

We examine the interaction between the legal protection of investors, corporate governance within firms, institutional development between countries, and investable premia in emerging markets. In a multi country setting and using a novel dataset we find that better-governed firms experience significantly greater stock price increases upon equity market liberalization. We look to see whether well-governed firms in poorly governed countries enjoy an investability premium as measured by Tobin’s q. We find they do. Investors look beyond the seemingly weak country-level governance structures, and focus on corporate governance.

Keywords: Investability, Corporate Governance, Tobin’s q, Emerging Markets

JEL Classification: G15, G30, G34

Suggested Citation

O'Connor, Thomas and Kinsella, Stephen and O'Sullivan, K.P.V., Legal Protection of Investors, Corporate Governance, and Investable Premia in Emerging Markets (January 15, 2012). Available at SSRN: https://ssrn.com/abstract=1985540 or http://dx.doi.org/10.2139/ssrn.1985540

Thomas O'Connor (Contact Author)

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

County Kildare
Ireland

Stephen Kinsella

University of Limerick ( email )

Limerick
Ireland
+35361233611 (Phone)
+35361330316 (Fax)

HOME PAGE: http://stephenkinsella.net

K.P.V. O'Sullivan

University of Limerick- Kemmy Business School ( email )

Limerick
Ireland

HOME PAGE: http://www.vincentosullivan.com

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