Is Financial Globalization in Reverse after the 2008 Global Financial Crisis? Evidence from Corporate Valuations

63 Pages Posted: 20 Apr 2020

See all articles by Craig Doidge

Craig Doidge

University of Toronto - Rotman School of Management

George Andrew Karolyi

Cornell University - Samuel Curtis Johnson Graduate School of Management

René Stulz

Ohio State University (OSU) - Fisher College of Business

Multiple version iconThere are 2 versions of this paper

Date Written: April 2020

Abstract

For the last two decades, non-US firms have lower valuations than similar US firms. We study the evolution of this valuation gap to assess whether financial markets are less integrated after the 2008 global financial crisis (GFC). The valuation gap for firms from developed markets increases by 31% after the GFC – a reversal in financial globalization – while the gap for firms from emerging markets (excluding China) stays stable. There is no evidence of greater segmentation for non-US firms cross-listed on major US exchanges and the typical valuation premium of such firms relative to domestic counterparts stays unchanged. However, the number of such firms shrinks sharply, so that the importance of US cross-listings as a mechanism for market integration diminishes.

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Suggested Citation

Doidge, Craig and Karolyi, George Andrew and Stulz, René, Is Financial Globalization in Reverse after the 2008 Global Financial Crisis? Evidence from Corporate Valuations (April 2020). NBER Working Paper No. w27022, Available at SSRN: https://ssrn.com/abstract=3580580

Craig Doidge (Contact Author)

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6
Canada
416-946-8598 (Phone)

HOME PAGE: http://www.rotman.utoronto.ca/FacultyAndResearch/Faculty/FacultyBios/Doidge

George Andrew Karolyi

Cornell University - Samuel Curtis Johnson Graduate School of Management ( email )

Ithaca, NY 14853
United States

René Stulz

Ohio State University (OSU) - Fisher College of Business ( email )

2100 Neil Avenue
Columbus, OH 43210-1144
United States

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