Equity Market Liberalization and Firm Growth
30 Pages Posted: 4 Nov 2012
Date Written: November 3, 2012
Using a sample of 686 investable firms from 26 emerging market countries, I show that equity market liberalizations do not result in an increase in externally-financed growth rates for participating firms. In fact, I find mostly to the contrary, and at best, I find that investability is associated with no significant change in the contribution of external financing to firm growth. These findings are in line with recent work which shows that firms issue less equity capital post-liberalization, and suggest that the gains from equity market liberalizations may not be attributable to a reduction in financing constraints.
Keywords: external financing, investability, firm growth
JEL Classification: G15, G32
Suggested Citation: Suggested Citation