Date of this Version
Review of Finance
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.
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.
Gopalan, R., & Gormley, T. A. (2013). Do Public Equity Markets Matter in Emerging Economies? Evidence From India. Review of Finance, 17 (5), 1571-1615. http://dx.doi.org/10.1093/rof/rfs036
Date Posted: 27 November 2017
This document has been peer reviewed.