《Corporate Valuation around the World》.pdf

Corporate Valuation around the World: The Effects of Governance, Growth, and Openness Choong Tze Chua Lee Kong Chian School of Business Singapore Management University Singapore 178899 E-mail: ctchua@smu.edu.sg Cheol S. Eun College of Management Georgia Institute of Technology Atlanta, GA 30332-0520 E-mail: cheol.eun@mgt.gatech.edu Sandy Lai Lee Kong Chian School of Business Singapore Management University Singapore 178899 E-mail: sandylai@smu.edu.sg Corporate Valuation around the World: The Effects of Governance, Growth, and Openness Abstract The purpose of this paper is to provide a comprehensive analysis of corporate valuation around the world. Specifically, we (i) document and compare corporate valuation around the world, and (ii) identify the key factors that drive cross-country differences in valuation. In doing so, we utilize the country-level Tobin’s q (CTQ), computed as the ratio of the aggregate market value to book value of all assets held by all public firms domiciled in a country, which amounts to the Tobin’s q for the ‘market portfolio’ of the country. The key findings of the paper are: First, CTQ varies greatly across countries, ranging from 0.73 for Venezuela to 2.11 for Finland, with the international mean of 1.30 during our sample period 1999-2004. Despite the steady integration of the world economy in recent years, corporate valuation remains starkly different