Stock Market Openings: Experience of Emerging Economies

Assessing the contagion effect on herding behaviour under segmented and integrated stock markets circumstances in the USA, China, and ASEAN-5

“…Liberalization and open financial markets should allow global investors to enter the market, buy domestic stocks and apply international portfolio diversification. This will eventually lead to the demands and the urgent need for firms' management to increase transparency and accountability that will generate a growing resources allocation, reduce the risk of holding stocks and reduce cost of capital, which in turn leads to increased real assets investment and higher economic welfare (Arouri, Nguyen, and Pukthuanthong 2012, Diamandis 2008, Kim and Singal 2000).…”

The Hazard Rate of Foreign Direct Investment: A Structural Estimation of a Real‐option Model*

“…To the best of our knowledge, only Bekaert and Harvey (1997) find a downward trend in stock market volatility when emerging markets open up to foreign investors. Later studies (De Santis and Imrohoroglu, 2000; Han Kim and Singal, 2000) argue, however, that their result is based on a sample of countries out of which only three showed a significant decrease in volatility, while one an increase. Using a much richer sample of countries, the later papers do not find a significant overall effect of liberalization on volatility up to 5 years after the liberalization date.…”

Stock Market Liberalisation and Cost of Equity: Firm-level Evidence from Malaysia

“…In fact, Bekaert and Harvey (2000) acknowledge that foreign ownership is the best indicator because it measures the actual presence of foreign investors across different firms within the same country over time. (Bekaert & Harvey, 2000;Henry, 2000;Kim & Singal, 2000) 2. Degree of stock market openness (Edison & Warnock, 2003;Kaminsky & Schmukler, 2008;Schindler, 2009 (Lane & Milesi-Ferretti, 2007) Foreign ownership Source: Chang (2012) This paper extends the stock market liberalisation literature by conducting a firmlevel analysis on the emerging economy of Malaysia using foreign ownership.…”

“…We explore the relationship between foreign ownership and cost of equity, as the latter is the focus area of those first generation stock market liberalisation papers (Bekaert & Harvey, 2000;Henry, 2000;Kim & Singal, 2000). Their interest is motivated by the theoretical prediction of neoclassical model, in which stock market liberalisation is expected to cause a permanent fall in the cost of equity, with the attendant effects on aggregate investment and economic growth (for details, see Henry, 2003Henry, , 2007.…”

“…Henry (2000) reports an abnormal return associated with liberalisation as high as 3.3% per month in real dollar term for 12 emerging equity market indices. Kim and Singal (2000) record a sharp rise in stock prices after the opening of 20 emerging markets. The literature on stock market integration also predicts, via international asset pricing models, that when a local market becomes more integrated with the world markets, it brings about an improvement in risk sharing and thus contributes to the reduction of the cost of capital (see Errunza & Miller, 2000;de Jong & de Roon, 2005).…”