Equity Market Liberalizations as Country Ipos

26 Pages Posted: 13 Feb 2003 Last revised: 21 Jun 2009

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: February 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.

Suggested Citation

Martell, Rodolfo and Stulz, Rene M., Equity Market Liberalizations as Country Ipos (February 2003). NBER Working Paper No. w9481. Available at SSRN: https://ssrn.com/abstract=379268

Rodolfo Martell

Barclays Global Investors ( email )

45 Fremont Street
San Francisco, CA 94105
United States

Purdue University - Krannert School of Management ( email )

403 West State Street
KRAN 477
West Lafayette, IN 47907-2056
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 ECARES ULB CP 114
B-1050 Brussels
Belgium

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