The structure of equity markets across countries: Scarcity and stock valuations

Matias Braun

Finance Research Letters, 2014, vol. 11, issue 4, 385-397

Abstract: We build a dataset of the industrial composition of the stock market and the economy for 26 countries. This composition is far from representative of that of the economy, particularly in less-developed markets. Based on this, we build a measure of scarcity of investable securities and show that industries that are underrepresented relative to the economy exhibit higher valuations. Moreover, valuation differences are shown to be more important when informational issues make it more difficult for firms to get listed.

Keywords: Financial development; Cross-country (search for similar items in EconPapers)
JEL-codes: G10 G14 G15 G30 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:11:y:2014:i:4:p:385-397

DOI: 10.1016/j.frl.2014.10.004

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