Emerging and Frontier Markets
The Institute of Corporate Finance has a broad interest in emerging and frontier financial markets. On the one hand, we focus on the financial market development, including the market efficiency and integration. On the other hand, we concentrate on the diversification value offered by emerging and frontier markets. The following selected studies represent some of our research interests.
Sovereign rating announcements and the integration of African banking markets
The current study analyzes the impact of long-term foreign-currency sovereign rating announcements of African states on bank stocks. We find negative sovereign rating announcements unexpectedly lead to significant positive abnormal returns for banks, mainly contributed by banks in the non-reviewed African countries, which are magnified if announcements are rating downgrades but weakened if banks are headquartered in the Africa Free Trade Zone. Our preliminary findings highlight the reversed spillover effects of sovereign ratings in Africa and the importance of free trade agreements to improve the overall capital market integration.
The effects of offshore financial centers on multinational entities
Along with the increasing uncertainty related to policy and regulation across the world, the diversification value of offshore financial centers is getting more attention from global investors. The current study investigates how do multinational entities use subsidiaries in offshore financial centers (OFCs), including conduit and sink OFCs, to improve their financial performance and legislation protection. Besides, we evaluate the associated wealth effects and risks for shareholders, to get a conclusion whether the subsidiaries in OFCs bring benefits or damages to multinational entities. In the following steps, we also examine the influence of press release, e.g. Panama Paper on the involved multinational corporations in short and long term.