Information Channels in Frontier Emerging Markets
Informational efficiency can only exist to the degree to which information about individual companies reaches the investor. This chapter raises the question: How do foreign investors learn about the pre-emerging stock market of Russia and its companies? After establishing that the main channel of information is brokerage research reports, a more detailed analysis is conducted about individual companies and their transparency in light of this predominant information channel. Finally, three portfolios are created: (1) top-transparency portfolio, (2) medium-transparency portfolio, and (3) bottom-transparency portfolio. The creation of the three portfolios is supported by the AK&M survey which ranks companies by their degree of information disclosure.1 The three portfolios will be used in chapter 7 as a prerequisite for the comparative analysis of relative market efficiency.
KeywordsForeign Investor Information Disclosure Information Channel Investor Sentiment Individual Security
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