Finance Papers

Document Type

Journal Article

Date of this Version

2013

Publication Source

Review of Finance

Volume

17

Issue

5

Start Page

1571

Last Page

1615

DOI

10.1093/rof/rfs036

Abstract

Do public equity markets serve an unique role that is not easily served by other forms of financing in emerging economies? We analyze this question using the collapse of India’s equity market in 1997, which provides an exogenous shock to firms’ ability to issue equity. We find that both public and private firms exhibit higher bankruptcy rates and lower growth after 1997. The decline in growth is greater among firms with more external finance needs and fewer tangible assets. Overall, the evidence suggests that public equity markets are an important, not easily replaced, source of finance in emerging economies.

Copyright/Permission Statement

This is a pre-copyedited, author-produced PDF of an article accepted for publication in Review of Finance following peer review. The version of record is available online at: http://dx.doi.org/10.1093/rof/rfs036.

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Date Posted: 27 November 2017

This document has been peer reviewed.