Capital markets perform two distinct functions: provision of capital and facilitation of good governance through information production and monitoring. I argue that the governance function has more impact on the efficiency with which resources are utilized within the firm. Based on industry...

In this paper we propose a new method to compute the cost of capital in domestic and in international settings. Our formulas show the effect of information costs on the cost of capital and give the conditions under which the domestic and the international approach yield the same results in the...

This paper uses a triple difference approach to assess whether the adoption of the Sarbanes-Oxley Act predicts long-term changes in cross-listing premia of affected foreign firms. I measure cross-listing premia as the difference between the Tobin's q of a cross-listed company and a...

Concern is growing that the U.S. capital markets are losing market share to overseas competitors. A decline in foreign initial public offerings indeed suggests that the U.S. equity market is becoming less attractive to certain issuers. However, evidence on the competitiveness of the U.S. equity...

This paper presents empirical evidence from the Turkish capital market by investigating the risk perception of the companies, their risk management policies and discusses the impact of derivatives on the financial stability in Turkish economy. It focuses on non-financial companies that play a...

We compute the opportunity cost for rational risk averse agents of using technical trading rules in the foreign exchange rate market. Our purpose is to investigate whether these rules can be interpreted as near-rational investment strategies for rational investors. We analyze four different...

La Porta et al. have shown that differences among countries in legal codes and enforcement of investor protection account for much of the disparity in the size and development of their financial markets. According to their empirical measure of shareholder protection, Germany scores only one out...

A new governance index is constructed, which forms the basis of a new governance valuation factor, defined as the product of the firm governance index and the country institutional quality. Using monthly returns of 4,714 blue chip firms from 35 OECD equity markets for 17 years, our tests of...

How do developments at lending institutions that alter the way they grant and monitor loans influence their borrowers' financial reporting quality (FRQ)? We examine this question by investigating the influence that privatizations of Chinese state banks (CSBs) had on the quality of their...

International financial markets are becoming integrated. Hence, globalrisk factor are increasingly important for portfolio selection andasset pricing. The recent empirical finance literature has confirmedthat both the global market portfolio and exchange rate risk factorsconstitute important...