Financial liberalization, financial deepening and efficiency implications in the emerging markets : preliminary evidence from Turkey

Version of RecordThe chapter investigates the implications of financial liberalization and financial deepening on the intertemporal behavior of stock returns in the Turkish equity markets. The objective of the study is to test return predictability and the changes in this behavior in two qualitatively different time periods. The empirical findings indicate that return behavior does not change as the financial markets deepen in Turkey. Return characteristics qualitatively remain unchanged and return predictability continues. The adverse implications of this finding are rather severe and they are addressed in the conclusions.Aybar, C. B. (1998). Financial Liberalization, Financial Deepening and Efficiency Implications in the Emerging Markets: Preliminary Evidence from Turkey. In Contractor, F. J. (Ed.), Economic Transformation in Emerging Countries (127-139). Oxford: Elsevier

The emerging securities market in Russia

Author's OriginalThis paper examines the Russian equity market from speculative infancy to its modern-day status as an asset in the global economy.Khambata, D. & Aybar, C. (1998). The Emerging Securities Market in Russia. Journal of East-West Business, 4(3), 5-17. doi: 10.1300/J097v04n03_0

Emerging market multinationals : an analysis of performance and risk characteristics

Author's OriginalThis study explores the risk and performance characteristics of emerging market multinationals (EMNCs). We use a sample composed of 79 EMNCs from 15 countries located in Africa, Asia, Eastern Europe-Russia, and Latin America. Our risk and performance analyses are based on monthly share price returns collected over 1996-2003 period and annual accounting data. We find that EMNCs on average perform better than their respective country market indices, a widely used EM benchmark, S&P500 and, global market index (MSCI-World) during the period of analysis. Our sample firms on average earn 13.21% return on assets, 8.97% return on equity, and 11.96% return on invested capital. We also find that EMNC returns are highly volatile, and despite some level of diversification achieved by EMNCs, their returns remain highly sensitive to local market shocks. The cross-sectional analysis of the determinants of the performance of the EMNCs reveals that leverage and systematic risk are the most important factors, followed by size. Our analysis indicates that performance is not affected by the degree of internationalization and EMNC investments in developed markets have a positive impact on the value. Finally, our results indicate that EMNCs in less risky emerging markets enjoy higher firm value.Aybar, B. & Thirunavukkarasu, A. (2005). Emerging Market Multinationals: An Analysis of Performance and Risk Characteristics. Journal of Asia-Pacific Business, 6(2), 5-39. doi:10.1300/J098v06n02_0

CORPORATE GOVERNANCE AND FIRM VALUE IN EMERGING MARKETS AN EMPIRICAL ANALYSIS OF ADR ISSUING EMERGING MARKET FIRMS

This study explores the value implications of good corporate governance for a sample of 54 ADR issuing emerging market firms (EMFs) from 9 countries primarily located in the regions of Asia, Eastern Europe and Latin America and the and employs recently constructed company composite corporate governance metric along with some alternative corporate governance measures associated with the origin of the issuing firm. Although the ADR literature primarily focuses on the impact of subscription to US disclosure requirements we contend that company and country specific corporate governance standards play a significant role in the risk reduction and ensuing value capture.  The fundamental inquiry in this study has the following foci: The primary focus is on the impact of corporate governance structures on firm performance as to whether adherence to standards creates market value for ADR issuing EMFs.  Do good corporate governance practices affect the value of EMFs? The secondary focus is concerned with whether the impact of corruption level and legal system in a firm’s home country affect the corporate structures of EMFs thus affecting the market value of firms.  In this study, we utilize Tobin’s q as the measure of firm performance/market value.  Our findings suggest that there is a significant correlation between corporate governance structures of ADR issuing EMFs and their market values and/or performances.  The results also indicate that the level of corruption and legal structures in home countries of EMFs strongly impact the corporate governance structures of these firms and sequentially affect their market values. Therefore, this research further contributes to the scholarly findings and suppositions that corporate structures of firms do create consequences on firm value

Internalization strategies and value implications of Latin American emerging market multinationals

Version of RecordThis study investigates the Internationalization strategies and their value implications of Latin American Emerging Market Multinationals (LAEMMs). We examine 66 mergers and acquisitions (M&A) announcements, 20 joint venture (JV) announcements and 9 Strategic Alliance (SA) announcements associated with LAEMMs during the sample period of 1991-2005. First, the paper explores the effects of cross-border expansion patterns on firm value creation. Second, it examines market reaction to the announcements of cross-border expansion patterns. Third, it evaluates firm performance in relation to the cross-border expansion activities. This study finds that most LAEMMs do not earn significantly positive abnormal returns during the event windows defined in this study. However, it is generally evident that there is value creation in international expansion activities. According to the event-study results, value creation is mostly associated with SAs. This finding is consistent with previous research. It is also indicated that most SA announcements are received by the market positively. JVs also experience value creation during the event windows utilized in this study. However, value creation of JVs is not to the extent that of SAs. Market reaction to JV announcements is also positive, but not to the degree of SAs.Ficici, A. & Aybar, C. B. (2009). Internalization strategies and value implications of latin american emerging market multinationals. InternexT - Revista Eletrônica de Negócios Internacionais da ESPM, 4(1), 60-78

Performance and value implications of cross-border acquisitions in telecommunications industry : the case of US Telecom companies

Version of RecordThis study analyzes the impact of cross-border acquisitions of US Telecom Operators on the shareholder value and firm performance. We analyzed the value implications of 33 acquisitions made by US Telecommunication companies in 18 countries located in North America, Europe, Latin America and Asia Pacific. While 15 of the target companies were domiciled in developed countries, 18 were located in Latin American and Asian emerging markets. Total value of acquisitions included in the sample was $12.3bn with a mean transaction value of$363.8m. Our small sample analyses revealed that cross-border acquisitions of US Telecom companies on the average did not create value for the shareholders. We also could not identify any significant performance improvements in the post acquisition period. An interesting result of our empirical analysis was the finding that acquisitions of targets in emerging markets generated higher cumulative abnormal returns than the targets in developed country markets.Aybar, C. B. & Kan, O. B. (2003, July). Performance and value implications of cross-border acquisitions in the telecommunications industry: The case of US Telecom multinationals. Paper presented at the Annual Meeting of the Academy of International Business, Monterey California. Retrieved from http://academicarchive.snhu.ed

Volatility in Istanbul Stock Exchange

Author's OriginalSince economic agents make the decisions based on the perceived distribution of the random variables in the future, assessment and measurement of the variance has a significant impact on their course of action. Therefore, market participants’ ability to accurately measure and predict the stock market volatility has wide spread implications. This capability has a particular importance in an environment, where the perception of high levels of volatility has the potential to erode the investor confidence and divert the capital inflows from equity markets. This is a particular concern for the emerging equity markets that lack the advanced institutional and informational infrastructures and which are very vulnerable to domestic and foreign capital flows. The purpose of this study is to determine the time-varying characteristics of volatility in an emerging stock market by utilizing rich family of ARCH models. The primary focus of the study is to explore the nature of volatility in the ISE.Aybar, C. B. & Yvan, Z. A. (1998). Volatility in Istanbul Stock Exchange. ISE Review, 6(2)

Globalization, emerging market economies and currency crisis in Asia : implications on economic reform and development

Author's OriginalRecent experiences in Latin America and Asia provide ample evidence that countries in the process of integration are increasingly exposed to internal and external economic shocks. More importantly, this growing vulnerability of particularly developing economies has the potential of undermining decades of development efforts. The Asian crisis clearly demonstrates that we are increasingly unable to predict the triggers of such crises, and certainly lack the institutional arrangements to contain them. This translates into the fact that our ability to manage the interaction between domestic and international economic forces is limited or undermined by certain factors. This practical outcome has the potential to delay the process of globalization and integration of developing economies into the world economy.Aybar, C. B. & Milman, C. D. (1999). Globalization, emerging market economies and currency crisis in Asia: Implications on economic reform and development. Multinational Business Review, 7(2), 37-44

Patterns of corporate ownership and privatization in Visegrad countries : 1989-1996

Author's OriginalThe article analyzes merger and acquisition activities in Visegrad Countries (the Czech Republic, Poland, Hungary and Slovakia). The analysis established linkages among the FDI, Privatization and M&A activities and reports the characteristics of transactions in the region in a comparative spirit. The findings indicate that majority of activities in the region involved foreign investors from Western Europe and USA. The M&A activities were concentrated in manufacturing segments such as automobiles, food processing, glass and clay, service segments such as telecom, utilities and financial services. The study also revealed some pre and post transaction ownership patterns in respective countries as well as methods of acquisition.Aybar, C., Khambata, D. & Milman, C. (2000). Patterns of Corporate Ownership and Privatization in Visegrad Countries: 1989-1996. Journal of East-West Business, 6(1), 57-80. doi:10.1300/J097v06n01_0

Privatization and regulation in Turkish telecommunications

Version of RecordThe importance of efficient workings of network industries and the markets in which they operate has long been recognized in the literature. In a parallel fashion, policy makers around the world initiated various restructuring efforts focusing on these sectors. However, the issues of privatization and much needed subsequent regulatory framework face considerable challenges in developing countries. Both political opposition and difficulties encountered in the process of privatization caused major delays in overall privatization and restructuring efforts of these countries. This paper focuses on the telecommunications sector and the Turk Telekom case, in particular, assessing the prospects for its much-debated divestiture, evaluating the company specifics and subsequent regulatory agenda. In doing that, it emphasizes the current "telecom meltdown" in international markets, and compares telecommunications privatizations of various nations. Additionally, the study reviews major regulatory methods and draws on some recommendations for policy makers in the light of the U.S experience in this sector.Aybar, C. B., Guney, S., & Suel, H. (2001, March). Privatization and regulation in Turkish telecommunications: A critical assessment (Working Paper). Manchester, NH: Southern New Hampshire University. Retrieved from http://academicarchive.snhu.ed