Krannert School of Management
West Lafayette, IN 47907
Institutional Affiliation: Purdue University
NBER Working Papers and Publications
|February 2003||Equity market liberalizations as country IPOs|
with Rene M. Stulz: w9481
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.
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