We study the success and failure of 59 newly established (“nascent”) stock markets since 1975 in their first 40 years of activity. Nascent markets differ markedly in their success, as measured by number of listings, market capitalization, and trading activity. Long-term success is in part determined by early success: a high initial number of listings and trading activity are necessary, though not sufficient, conditions for long-term success. Banking sector development at the time of establishment and development of national savings over the life of the stock market are the other two most reliable predictors of success. We find little evidence that structural factors such as country size or legal and political institutions matter. Rather, our results point to an important role of banks, demand factors, and initial success in fostering long-term stock market development.
34th Symposium on Money, Banking and Finance
Paris Nanterre, France
American Economics Association (AEA) Annual Meeting 2017
International Organization of Securities Commissions (IOSCO)
European Finance Association (EFA) Annual Meeting 2016
Do index funds' family ties benefit the firms they own?
I investigate the impact of ties between index and non-index funds within the same mutual fund family on the value of firms in which both funds invest. Theoretically, I show that family ties increase non-index funds’ incentives to purchase additional shares and monitor a firm. This is because non-index funds are more likely to be able to influence management when index funds in the same family hold the same firm. Empirically, using exogenous variation in family ties following a firm’s addition to an index, I show that family ties are associated with higher non-index fund ownership. Furthermore, firms held by funds with family ties are more profitable and have higher valuations. The effect of family ties on valuation is larger for “dedicated” fund-firm relations and for firms in highly innovative industries, for which the potential gains from monitoring are the highest ex-ante.
Financial Management Association (FMA) Annual Meeting 2019, New Orleans, USA
Financial Management Association (FMA) Annual Meeting 2017, Boston, USA
The political consequences of financial market development: Evidence from the opening of African stock exchanges
with Mathijs A. van Dijk
Work in Progress
University of South Australia, Adelaide, Australia