How Institutional Development News Moves an Emerging Market

33 Pages Posted: 19 Mar 2019 Last revised: 9 Apr 2019

See all articles by Alexander Guzmán

Alexander Guzmán

CESA School of Business

Vikas Mehrotra

University of Alberta - Department of Finance and Statistical Analysis

Randall Morck

University of Alberta - Department of Finance and Statistical Analysis; National Bureau of Economic Research (NBER); European Corporate Governence Institute; Asian Bureau of Finance and Economic Research

Maria-Andrea Trujillo

CESA School of Business

Date Written: April 7, 2019

Abstract

Major moves in Colombia’s stock market in the 2000s correspond to major news of progress or setbacks in rebuilding the country’s institutions, shattered by widespread guerrilla insurgencies in the 1990s. This contrasts with prior work reporting no news on major market moves in the US, a country with comparatively stable institutions. Colombian economy-level news during the institutional rebuilding phase may have been exceptionally economically significant. This suggests that stock market moves might usefully gauge the importance of institutional changes in other developing economies.

Keywords: market efficiency, noise trading, institutions, economic development

JEL Classification: G14, G41, N26, O43

Suggested Citation

Guzman, Alexander and Mehrotra, Vikas and Morck, Randall K. and Trujillo, María-Andrea, How Institutional Development News Moves an Emerging Market (April 7, 2019). University of Alberta School of Business Research Paper No. 2019-503. Available at SSRN: https://ssrn.com/abstract=3336178 or http://dx.doi.org/10.2139/ssrn.3336178

Alexander Guzman (Contact Author)

CESA School of Business ( email )

Bogota
Colombia

Vikas Mehrotra

University of Alberta - Department of Finance and Statistical Analysis ( email )

School of Business
University of Alberta
Edmonton, Alberta T6G 2R6
Canada
780-492-2976 (Phone)
780-492-3325 (Fax)

Randall K. Morck

University of Alberta - Department of Finance and Statistical Analysis ( email )

2-32C Business Building
Edmonton, Alberta T6G 2R6
Canada
780-492-5683 (Phone)
780-492-3325 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

European Corporate Governence Institute ( email )

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

Asian Bureau of Finance and Economic Research ( email )

BIZ 2 Storey 4, 04-05
1 Business Link
Singapore, 117592
Singapore

María-Andrea Trujillo

CESA School of Business ( email )

Bogota
Colombia

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