On the Relationship Between Exchange Rates and Stock Prices: Evidence from Emerging Markets

This study examines dynamic linkages between the exchange rates and stock prices for twelve emerging market countries for the period from May 1994 to April 2010 by using linear and non-linear Granger causality tests. Our empirical results show that stock prices and exchange rates have linear and non-linear bi-directional causality in most cases. The exceptional countries are Brazil, Poland and Taiwan, in that there is no evidence for a non-linear Granger causality from stock prices to exchange rates. The results support both the portfolio balance and the goods market theories for eight out of twelve countries. JEL Classifications Codes: F30, G15

CORPORATE GOVERNANCE AND INVESTORS' PERCEPTIONS OF FOREIGN IPO VALUE: AN INSTITUTIONAL PERSPECTIVE

We build on sociology-grounded research on financial market behavior and suggest a “nested” legitimacy framework to explore U.S. investor perceptions of foreign IPO value. We draw on a fuzzy-set theoretic approach to demonstrate how different combinations of monitoring and incentive-based corporate governance mechanisms lead to the same level of investor valuations of firms. We also argue that institutional factors related to the minority shareholder protection strength in the foreign IPO’s home country represent a boundary condition that affects the number of governance mechanisms required to achieve U.S. investors’ high value perceptions. Our findings, drawn from a unique, hand-collected dataset of foreign IPOs in the U.S, contribute to the sociological perspective on comparative corporate governance and the inter-dependencies between organizations and institutions