NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Equity market liberalizations as country IPOs

Rodolfo Martell, Rene M. Stulz

NBER Working Paper No. 9481
Issued in February 2003
NBER Program(s):   AP   CF   IFM

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.

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Document Object Identifier (DOI): 10.3386/w9481

Published: Martell, Rodolfo and Rene Stulz. "Equity Market Liberalizations as Country IPOs." American Economic Review, Papers and Proceedings 93, 2 (2003): 97-101. citation courtesy of

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