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Risk Management and Corporate Governance in Imperfect Capital Markets

In: The Changing Environment of International Financial Markets

Author

Listed:
  • Klaus P. Fischer
  • Edgar Ortiz

    (Universidad Nacional Autónoma de México)

  • A. P. Palasvirta

Abstract

Successful business in the developing countries has often evolved into complex industrial ‘groups’ – a sort of conglomerates. Although their accomplishments are often impressive, these firms have rarely become fully publicly owned corporations. Little or no common stock is sold, and ownership and control remains tightly held in a circle of family members and friends. We contend that such behaviour is a rational response to risk bearing by investors in the absence of arms length financial markets. It is an efficient market solution to uncertainty and political risk when efficient markets do not exist.

Suggested Citation

  • Klaus P. Fischer & Edgar Ortiz & A. P. Palasvirta, 1994. "Risk Management and Corporate Governance in Imperfect Capital Markets," Palgrave Macmillan Books, in: Dilip K. Ghosh & Edgar Ortiz (ed.), The Changing Environment of International Financial Markets, chapter 15, pages 201-230, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-1-349-23161-4_15
    DOI: 10.1007/978-1-349-23161-4_15
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    Cited by:

    1. Ortiz, Edgar & Arjona, Enrique, 2001. "Heterokedastic behavior of the Latin American emerging stock markets," International Review of Financial Analysis, Elsevier, vol. 10(3), pages 287-305.

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