Equity Market Liberalizations as Country Ipos

Ohio State University, Dice Center Working Paper No. 2003-1

26 Pages Posted: 11 Mar 2003

See all articles by Rodolfo Martell

Rodolfo Martell

Barclays Global Investors; Purdue University - Krannert 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: January 2003

Abstract

Equity market liberalizations are like IPOs, but they are IPOs of a country's stock market rather than of individual firms. Both are endogenous events whose benefits are limited by poor investor protection, agency costs, and information asymmetries. As for stock prices following an IPO, there are legitimate concerns about the efficiency in the period following the liberalization of the stock market returns of countries that liberalize their equity markets. Equity markets of liberalizing countries experience extremely strong performance immediately after the liberalization, but then go through a period of poor performance. This pattern of stock returns is more dramatic for countries with poorer financial development before the liberalization.

JEL Classification: F3, G14, G15, F21

Suggested Citation

Martell, Rodolfo and Stulz, Rene M., Equity Market Liberalizations as Country Ipos (January 2003). Ohio State University, Dice Center Working Paper No. 2003-1, Available at SSRN: https://ssrn.com/abstract=375480 or http://dx.doi.org/10.2139/ssrn.375480

Rodolfo Martell

Barclays Global Investors ( email )

45 Fremont Street
San Francisco, CA 94105
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Purdue University - Krannert School of Management ( email )

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KRAN 477
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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)

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European Corporate Governance Institute (ECGI)

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Belgium

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