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European Union Enlargement Announcement and Corporate Valuations

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  • Katarzyna Platt

Abstract

This study explores the effects of the European Union accession announcement on the valuations of companies in the prospective member states. I examine firm level data from ten countries which joined the EU in May 2004. My analysis reveals that the announcement of these countries’ future EU membership in November 2001 significantly increased the Tobin’s Q ratios of their publicly traded firms several years before formal membership was granted. This increase in firm value can likely be attributed to a reduced cost of capital and/or an expected increase in growth opportunities and cash flows, resulting from the announcement of their countries’ inclusion in the EU.

Suggested Citation

  • Katarzyna Platt, 2018. "European Union Enlargement Announcement and Corporate Valuations," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 54(2), pages 430-449, January.
    • Handle: RePEc:mes:emfitr:v:54:y:2018:i:2:p:430-449
    DOI: 10.1080/1540496X.2016.1250210
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