Thomas O'Connor

The sequencing of stock market liberalization events and corporate financing decisions

We examine if the sequence of stock market liberalization events matters for corporate financing choices. We contrast firms who attain ‘investable’ status through domestic reforms with those who do so by issuing American Depository Receipt programs. We find that the first liberalization event prompts similar corporate responses regardless of the path followed. However, we find differential effects between firms who issue ADRs after realizing financial liberalization and those who use ADR initiations to achieve this status. Here, the sequence matters and the capital structure choices of the two groups are very different.

Does cross listing in the USA really enhance the value of emerging market firms

Purpose - The purpose of this paper is to study the valuation effects of cross listing in the USA for a panel of emerging market firms over the period from 1990 to 2003. Design/methodology/approach - Using firm-level data from Worldscope, the paper examines the valuation effects of listing in the USA for a panel of emerging market firms. Specifically, the following techniques are employed in order to control for self-selection bias: calculate the average effect of the treatment on the treated using propensity score matching, pooled ordinary least squares with Mundlak corrections, firm-fixed effects, and panel treatment effects models. Findings - In line with previous researches, only those firms from high-disclosure regimes gain from Level 2/3 listing in the USA. The gains are not immediate, but materialize once the firm has listed in the USA for at least five years. Also documented were long-term, but not immediate valuation gains for Level 1 over-the-counterissues. In contrast to Level 2/3 issues, the gains are concentrated amongst firms from low-disclosure regimes. No positive valuation effects were found for Rule 144a private placements. The results suggest that the decision on the part of the majority of firms from low-disclosure regimes not to list as exchange traded depositary receipts is warranted. Research limitations/implications - It may have been interesting to further examine the causes of the results. For example, it would have been interesting to see how firm visibility (media and analyst coverage), liquidity, and capital issuance changed around the time of listing. However, data availability prevented such an analysis. Originality/value - As opposed to standard event studies, this paper examines the effect of listing on firm value using valuation metrics, i.e. Tobins q. Second, and unlike event studies, the techniques employed are substantially more robust to self-selection bias.

Legal Protection of Investors, Corporate Governance, and Investable Premia in Emerging Markets

We examine the interaction between the legal protection of investors, corporate governance within firms, institutional development between countries, and investable premia in emerging markets. In a multi country setting and using a novel dataset we find that better-governed firms experience significantly greater stock price increases upon equity market liberalization. We look to see whether well-governed firms in poorly governed countries enjoy an investability premium as measured by Tobin’s q. We find they do. Investors look beyond the seemingly weak country-level governance structures, and focus on corporate governance.

Governance and the Corporate Life-Cycle

Purpose – The purpose of this research is to examine whether corporate governance changes along the corporate life-cycle. Design/methodology/approach – In a sample of 205 firms from 21 emerging market countries and using a life-cycle proxy from the dividends literature, we use a governance-prediction model which examines whether corporate governance differs along the corporate life-cycle. Findings – Mature firms tend to practice better overall corporate governance. Discipline and independence improve as firms mature. Firms tend to be most transparent and accountable when they are young. These findings suggest that the resource/strategy and monitoring/control governance functions are relevant but at different life-cycle stages. Research limitations/implications – In the absence of longitudinal governance data with sufficient coverage to track within-firm changes in corporate governance along the corporate life-cycle, we analyze differences in corporate governance between-firms at different life-cycle stages. Originality/value – We use an alternative, yet new measure from the dividends literature to account for the firm’s position along the corporate life-cycle. With this new measure, our findings are in line with the predictions of Filatotchev et al. (2006).

Dividend payout and corporate governance in emerging markets: which governance provisions matter?

In this paper I examine the relationship between individual corporate governance provisions and corporate dividend payout. Using a sample of 220 firms from 21 emerging market countries, I show that dividend payout is an outcome of strong corporate governance. On closer inspection, I find that dividend payouts tend to be greater in firms which score highly in measures of board independence and accountability. I find some evidence which suggests that dividends substitute for a lack of transparency in emerging market firms.

The Effects of Ownership Structure on Corporate Financing Decisions: Evidence from Stock Market Liberalization

We analyze the impact of firm-specific stock market liberalization events on the capital structure and debt maturity decisions of firms from emerging market economies. We differentiate between firms based on their ownership structures at the time of liberalization and analyze their post-liberalization behavior regarding corporate financing decisions. Our empirical results show that single-class-share firms (typically with stronger corporate governance and better information environments) respond differently to their dual-class-share counterparts. Liberalization results in lower debt reliance for the former group while the latter lengthen the maturity of their debt portfolios.

Towards the Invention of the Irish Catholic Natio:1: Thomas Messingham's Florilegium (1624)

Influenced by contemporary developments in Church and State, the Irish emigre priest based in Paris, Thomas Messingham, used hagiography for the purpose, «inter alia», of establishing Irelands claim to be not only a nation in her own right but a nation by divine election - defined precisely by its Catholicism.

When does corporate governance matter? Evidence from across the corporate life-cycle

Purpose - – The purpose of this paper is to explore the relationship between corporate governance and firm value at different stages of the corporate life-cycle. Design/methodology/approach - – The authors use two measures, commonly employed in the literature, to differentiate between “immature” and “mature” firms, and estimate separate governance-value regressions for each set of firms. Findings - – The findings suggest that it is differences in the resource/strategic governance functions, which manifest in young firms which result in differences in value across firms, all else equal. The authors find no relationship between governance and firm value for older firms. Hence, differences in the monitoring aspect of governance between mature firms are not rewarded with a value premium. Research limitations/implications - – The findings imply that the strategic and resource roles of governance are “must haves” for firms since firms that score highly on these fronts are valued more highly. In contrast, differences in the monitoring aspect of governance are not rewarded, suggesting that effective monitoring is not a necessity, but rather a “nice to have”. The analysis is limited to a small sample of emerging market firms, and it would be of interest to extend this analysis to a larger and broader sample of firms. Originality/value - – The findings suggest that corporate governance is not valued at all stages of the corporate life-cycle.

Equity market liberalization and firm growth

Using a sample of 686 investable firms from 26 emerging market countries, I show that equity market liberalizations do not result in an increase in externally-financed growth rates for participating firms. In fact, I find mostly to the contrary, and at best, I find that investability is associated with no significant change in the contribution of external financing to firm growth. These findings are in line with recent work which shows that firms issue less equity capital post-liberalization, and suggest that the gains from equity market liberalizations may not be attributable to a reduction in financing constraints.

The relationship between dividend payout and corporate governance along the corporate life-cycle

This study explores the relationship between the quality of corporate governance and corporate dividend payout at different stages of the corporate life-cycle. In a sample of 220 firms from 21 emerging market countries, I show that the outcome model of dividends, which predicts that dividend payout increases in the strength of shareholder rights, prevails all along the corporate life-cycle. In a final series of tests, I show that this relationship holds only in instances where corporate governance and creditor rights are strong. Hence, the agency cost of equity and debt version of the outcome model of dividends holds at all stages of the corporate life-cycle. Finally, I find no evidence in support of the equity-only version of the substitution model of dividends.