Stock Market Liberalization and the Information Environment

51 Pages Posted: 17 May 2004

See all articles by Kee-Hong Bae

Kee-Hong Bae

York University - Schulich School of Business

Warren Bailey

Cornell University; Fudan University - Fanhai International School of Finance (FISF)

Connie X. Mao

Temple University - Fox School of Business and Management; Temple University - Department of Finance

Date Written: January 5, 2005

Abstract

We document beneficial associations between openness to foreign equity investors and the information environment in emerging stock markets. Openness is reflected in legal, regulatory, and cross-listing events, the fraction of stock available to foreign investors, and the size of U.S. portfolio flows. We find that firm-specific information, analyst coverage, and value-added by analysts increase with openness to foreign equity investment while earnings management tends to decline. Large changes in earnings-related information variable are attributed to foreign analysts who increase their presence, activity, and contribution after openness increases. Across a detailed sample of Korean firms, however, such effects are dampened for firms that rate poorly on governance.

Keywords: Stock market liberalization, international portfolio flows, emerging markets

JEL Classification: D82, F02, F36, G15

Suggested Citation

Bae, Kee-Hong and Bailey, Warren B. and Mao, Connie X., Stock Market Liberalization and the Information Environment (January 5, 2005). Available at SSRN: https://ssrn.com/abstract=468540 or http://dx.doi.org/10.2139/ssrn.468540

Kee-Hong Bae

York University - Schulich School of Business ( email )

4700 Keele Street
Toronto, Ontario M3J 1P3
Canada
416-736-2100 ext) 20248 (Phone)
416-736-5687 (Fax)

Warren B. Bailey (Contact Author)

Cornell University ( email )

Samuel CurtisJohnson Graduate School of Management
387 Sage Hall
Ithaca, NY 14853-6201
United States
607-255-4627 (Phone)
607-254-4590 (Fax)

HOME PAGE: http://courses.cit.cornell.edu/wbb1/

Fudan University - Fanhai International School of Finance (FISF) ( email )

China

Connie X. Mao

Temple University - Fox School of Business and Management ( email )

416 Alter Hall
Philadelphia, PA 19122
United States
215-204-4895 (Phone)
215-204-1697 (Fax)

Temple University - Department of Finance ( email )

Fox School of Business and Management
Philadelphia, PA 19122
United States
215-204-4895 (Phone)
215-204-1697 (Fax)

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