Foreign competition for shares and the pricing of information asymmetry: evidence from equity market liberalization

Balakrishnan, K, Vashishtha, R and Verrecchia, R E (2019) Foreign competition for shares and the pricing of information asymmetry: evidence from equity market liberalization. Journal of Accounting and Economics, 67 (1). pp. 80-97. ISSN 0165-4101 OPEN ACCESS

Abstract

Using the equity market liberalization of 23 emerging market countries between 1996 and 2006, we examine how the degree of competition for a firm's shares affects the price of information asymmetry. We find evidence of a significant decline in the pricing of information asymmetry as countries remove regulatory restrictions on foreign ownership. Our study provides novel evidence on the link between the degree of competitiveness of equity markets and the price of information asymmetry. The work also furthers our understanding of the economic consequences of foreign stock ownership.

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Item Type: Article
Subject Areas: Accounting
Date Deposited: 21 Nov 2018 16:44
Date of first compliant deposit: 05 Mar 2019
Subjects: Pricing
Capital markets
Competition
Foreign exchange markets
Information
Last Modified: 18 Sep 2024 09:36
URI: https://lbsresearch.london.edu/id/eprint/1017
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