Project summary
Liberalization of financial markets, globalization of trade and companies, and the rapid development of emerging markets during the last ten years have brought a major challenge to the financial world and researchers alike. In many emerging countries improvements in transparency, investor protection, legislation and the efficiency in general have further lowered the investment costs of the companies. On the other hand, foreign investors have been forced to reconsider their investments and to learn how to cope with new markets.
The purpose of the research consortium is to study the effects and consequences of the global integration process on emerging financial markets and on Russian market in particular. The project of research consortium consists of two subprojects.
1) The objective of the first subproject is to study how the increased integration of the emerging markets to the global financial markets has changed the pricing of the companies in the emerging countries.
Prior research on developed markets has shown that the liberalization process and the abolishment of restrictions on foreign investment together with potential changes in the currency regime have had enormous effects on the pricing of stocks (i.e., companies). For example, Finland experienced similar transition period in the late 1980s and 1990s. This process has had a huge effect on Finnish companies, market efficiency and all investors alike. Many emerging markets are currently faced with the similar development (e.g., Russia, China and India).
2) The objective of the second subproject is to investigate if the integration process has increased the efficiency of the emerging markets and the performance of the companies coming from the emerging countries.
The focus of this subproject is on studying the financial reporting of the companies, its creditability and the assimilation of its information into the stock market. The special goal of the study is to find out if investors are absorbing the information offered by earnings figures, and see how efficiently market is operating in this respect. In addition, the study will focus on finding out if international participation and ownership is creating more advanced accounting practices to the firms, and if these are creating higher quality earnings figures
Research consortium: Lappeenranta University of Technology, University of Vaasa
Project duration: 1.1.2007–31.12.2010
Funding (total): Academy of Finland 379.500 €
Contact information:
Professor Mika Vaihekoski
Lappeenranta University of Technology
Department of Business Administration
Tel. +358-5-621 7270
Email: firstname.lastname@lut.fi
Professor Minna Martikainen
Lappeenranta University of Technology
Department of Business Administration
Tel. +358-5-621 7271
Email: firstname.lastname@lut.fi
Professor Jussi Nikkinen
University of Vaasa
Department of Accounting and Finance
Tel. +358-6-3248 541
Email: j n @ u w a s a . f i