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Market segmentation and equity valuation : comparing Canada and the United States
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King, Michael R. and Segal, Dan (2008) Market segmentation and equity valuation : comparing Canada and the United States. Journal of International Financial Markets, Institutions and Money, 18 (3). pp. 245-258. doi:10.1016/j.intfin.2006.10.003 ISSN 1042-4431.
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Official URL: http://dx.doi.org/10.1016/j.intfin.2006.10.003
Abstract
We confirm that Canadian and U.S. equity markets remain segmented and find no evidence that integration is increasing over time. We establish this result by comparing the valuation multiples assigned to the equity of Canadian firms listed exclusively in the home market with a matched sample of U.S. firms over the period 1989–2004. Canadian firms have lower valuations based on multiples of market-to-book, price-to-last 12-month earnings, Tobin's q, and enterprise value-to-EBITDA, despite exhibiting higher sales growth and profitability. Consistent with market segmentation, this Canadian discount is reduced when Canadian firms cross-list on a U.S. stock exchange.
Item Type: | Journal Article | ||||||||
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Divisions: | Faculty of Social Sciences > Warwick Business School > Accounting Faculty of Social Sciences > Warwick Business School |
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Journal or Publication Title: | Journal of International Financial Markets, Institutions and Money | ||||||||
Publisher: | Elsevier Inc. | ||||||||
ISSN: | 1042-4431 | ||||||||
Official Date: | July 2008 | ||||||||
Dates: |
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Volume: | 18 | ||||||||
Number: | 3 | ||||||||
Page Range: | pp. 245-258 | ||||||||
DOI: | 10.1016/j.intfin.2006.10.003 | ||||||||
Status: | Peer Reviewed | ||||||||
Publication Status: | Published | ||||||||
Access rights to Published version: | Restricted or Subscription Access |
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