Rationalizing the value premium in emerging markets
We reconfirm the presence of value premium in emerging markets. Using the Brazil–Turkey–India–China (BTIC) grouping during a period of substantial economic growth and stock market development, we attribute the premium to the investment patterns of glamour firms. We conjecture based on empirical evid...
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| Format: | Article |
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Elsevier
2014
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| Online Access: | https://eprints.nottingham.ac.uk/47147/ |
| _version_ | 1848797475945578496 |
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| author | Ebrahim, M. Shahid Girma, Sourafel Shah, M. Eskandar Williams, Jonathan |
| author_facet | Ebrahim, M. Shahid Girma, Sourafel Shah, M. Eskandar Williams, Jonathan |
| author_sort | Ebrahim, M. Shahid |
| building | Nottingham Research Data Repository |
| collection | Online Access |
| description | We reconfirm the presence of value premium in emerging markets. Using the Brazil–Turkey–India–China (BTIC) grouping during a period of substantial economic growth and stock market development, we attribute the premium to the investment patterns of glamour firms. We conjecture based on empirical evidence that glamour firms hoard cash, which delays undertaking of growth options, especially in poor economic conditions. Whilst this helps to mitigate business risk, it lowers market valuations and drives down expected returns. Our evidence supports arguments that the value premium is explained by economic fundamentals rather than a risk factor that is common to all firms. |
| first_indexed | 2025-11-14T20:04:28Z |
| format | Article |
| id | nottingham-47147 |
| institution | University of Nottingham Malaysia Campus |
| institution_category | Local University |
| last_indexed | 2025-11-14T20:04:28Z |
| publishDate | 2014 |
| publisher | Elsevier |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | nottingham-471472020-05-04T16:45:09Z https://eprints.nottingham.ac.uk/47147/ Rationalizing the value premium in emerging markets Ebrahim, M. Shahid Girma, Sourafel Shah, M. Eskandar Williams, Jonathan We reconfirm the presence of value premium in emerging markets. Using the Brazil–Turkey–India–China (BTIC) grouping during a period of substantial economic growth and stock market development, we attribute the premium to the investment patterns of glamour firms. We conjecture based on empirical evidence that glamour firms hoard cash, which delays undertaking of growth options, especially in poor economic conditions. Whilst this helps to mitigate business risk, it lowers market valuations and drives down expected returns. Our evidence supports arguments that the value premium is explained by economic fundamentals rather than a risk factor that is common to all firms. Elsevier 2014-03-10 Article PeerReviewed Ebrahim, M. Shahid, Girma, Sourafel, Shah, M. Eskandar and Williams, Jonathan (2014) Rationalizing the value premium in emerging markets. Journal of International Financial Markets, Institutions and Money, 29 . pp. 51-70. ISSN 1042-4431 Asset Pricing Growth (i.e. Glamour) Stocks Multifactor Models Real Options Value (i.e. Unspectacular) Stocks. http://www.sciencedirect.com/science/article/pii/S104244311300098X?via%3Dihub doi:10.1016/j.intfin.2013.11.005 doi:10.1016/j.intfin.2013.11.005 |
| spellingShingle | Asset Pricing Growth (i.e. Glamour) Stocks Multifactor Models Real Options Value (i.e. Unspectacular) Stocks. Ebrahim, M. Shahid Girma, Sourafel Shah, M. Eskandar Williams, Jonathan Rationalizing the value premium in emerging markets |
| title | Rationalizing the value premium in emerging markets |
| title_full | Rationalizing the value premium in emerging markets |
| title_fullStr | Rationalizing the value premium in emerging markets |
| title_full_unstemmed | Rationalizing the value premium in emerging markets |
| title_short | Rationalizing the value premium in emerging markets |
| title_sort | rationalizing the value premium in emerging markets |
| topic | Asset Pricing Growth (i.e. Glamour) Stocks Multifactor Models Real Options Value (i.e. Unspectacular) Stocks. |
| url | https://eprints.nottingham.ac.uk/47147/ https://eprints.nottingham.ac.uk/47147/ https://eprints.nottingham.ac.uk/47147/ |