Is Financial Globalization in Reverse after the 2008 Global Financial Crisis? Evidence from Corporate Valuations

Fisher College of Business Working Paper No. 2020-03-05

Charles A. Dice Working Paper No. 2020-05

63 Pages Posted: 13 Apr 2020

See all articles by Craig Doidge

Craig Doidge

University of Toronto - Rotman School of Management

George Andrew Karolyi

Cornell University - Samuel Curtis Johnson Graduate School of Management

René M. Stulz

Ohio State University (OSU) - Department of Finance; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)

Multiple version iconThere are 2 versions of this paper

Date Written: April 13, 2020

Abstract

For the last two decades, non-US firms have lower valuations than similar US firms. We study the evolution of this valuation gap to assess whether financial markets are less integrated after the 2008 global financial crisis (GFC). The valuation gap for firms from developed markets increases by 31% after the GFC – a reversal in financial globalization – while the gap for firms from emerging markets (excluding China) stays stable. There is no evidence of greater segmentation for non-US firms cross-listed on major US exchanges and the typical valuation premium of such firms relative to domestic counterparts stays unchanged. However, the number of such firms shrinks sharply, so that the importance of US cross-listings as a mechanism for market integration diminishes.

Keywords: Financial globalization, Tobin’s q, corporate valuation, convergence, financial crisis

JEL Classification: F21, F65, G10, G15, G34

Suggested Citation

Doidge, Craig and Karolyi, George Andrew and Stulz, Rene M., Is Financial Globalization in Reverse after the 2008 Global Financial Crisis? Evidence from Corporate Valuations (April 13, 2020). Fisher College of Business Working Paper No. 2020-03-05. Available at SSRN: https://ssrn.com/abstract=3574664 or http://dx.doi.org/10.2139/ssrn.3574664

Craig Doidge

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6
Canada
416-946-8598 (Phone)

HOME PAGE: http://www.rotman.utoronto.ca/FacultyAndResearch/Faculty/FacultyBios/Doidge

George Andrew Karolyi

Cornell University - Samuel Curtis Johnson Graduate School of Management ( email )

Ithaca, NY 14853
United States

Rene M. Stulz (Contact Author)

Ohio State University (OSU) - Department of Finance ( email )

2100 Neil Avenue
Columbus, OH 43210-1144
United States

HOME PAGE: http://www.cob.ohio-state.edu/fin/faculty/stulz

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

European Corporate Governance Institute (ECGI)

c/o the Royal Academies of Belgium
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1000 Brussels
Belgium

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