Market segmentation and equity valuation: Comparing Canada and the United States
Publication Type
Journal Article
Publication Date
2008
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.
Discipline
Accounting | Corporate Finance | Portfolio and Security Analysis
Research Areas
Financial Performance Analysis
Publication
Journal of International Financial Markets, Institutions and Money
Volume
18
Issue
3
First Page
245
Last Page
258
ISSN
1042-4431
Identifier
10.1016/j.intfin.2006.10.003
Publisher
Elsevier
Citation
SEGAL, Dan and King, Michael.
Market segmentation and equity valuation: Comparing Canada and the United States. (2008). Journal of International Financial Markets, Institutions and Money. 18, (3), 245-258.
Available at: https://ink.library.smu.edu.sg/soa_research/813