CEF.UP – FIN Seminar/Webinar

Thursday – April 11^th, 2024 at 1:00 p.m. | Room 305| Online

Suppliers, Investors, and Equity Market Liberalizations

Martin Strieborny  – Adam Smith Business School – University of Glasgow (Scotland, United Kingdom)

Abstract:

“Allowing foreign investors to acquire equity stakes in domestic firms stimulates the real economy by promoting frictionless relationships between buyers and suppliers of intermediate goods. I combine insights from research on financial liberalization and relationships specific investment to derive this hypothesis and then use a difference-in-difference empirical framework to test it. Results from panel-data and event-study estimations confirm that equity market liberalizations boost output growth particularly in suppliers-dependent industries that require a high share of specialized inputs in their production process. Financial openness can thus facilitate smooth interactions between firms and an important corporate stakeholder – suppliers of crucial production inputs.”