There always has been the needed to assess the role that is placed by security analysts in the emerging markets. The desire is informed by the establishment that stock prices in the emerging markets move more together than the situation is in the developed markets. The implication of this finding is the suggestion that there is less first customized information in the emerging markets. In this case, the assertion is that the emerging markets are characterized by weak property rights which consequently discourage informed trading, preventing firm specific information from being integrated into the stock prices.
The emerging market’s lack of firm specific information is associated with a number of factors that include minimal regulations as well as dismal enforcement of information disclosure. There is the challenge posed by low degree of voluntary disclosure as well as corporate transparency and that most companies in the emerging markets are either owned by families or affiliated to groups making it difficult to collect the information. Continue reading