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This book attempts to answer these key questions: What are the revaluation effects and the impacts on the cost of capital, volatility, and correlation with world market returns from emerging stock market liberalization? These questions have been studied extensively at the market-level, but not at the firm level. Since foreign portfolio investors are known to prefer investment in large and well-known firms, the opening of capital markets should have a differential impact across securities depending on foreign investors´ demand. Our test results using country indices show statistically and economically significant revaluation effects, and increases in the cost of capital. More important than these market-level findings, we report significantly different impacts of stock market liberalization, based on foreign investors´ demand. Our findings have important implications for international investors seeking to manage their global exposure as well as for policy makers considering capital market liberalization.

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He is currently Associate Professor of Finance at Hanyang Univ. in Seoul, Korea. He received his Ph.D. in Finance from McGill Univ. in Canada, has been Assistant Professor at Dankook Univ. and has served as a researcher at KT. His research interest lies on issues such as global financial markets and international portfolio management.

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