-
Views
-
Cite
Cite
Arturo Bris, Yrjö Koskinen, Mattias Nilsson, The Euro and Corporate Valuations, The Review of Financial Studies, Volume 22, Issue 8, August 2009, Pages 3171–3209, https://doi.org/10.1093/rfs/hhn101
- Share Icon Share
Abstract
In this paper, we study the changes in corporate valuations induced by the adoption of the euro as the common currency in Europe. We use corporate-level data from seventeen European countries, of which eleven adopted the euro. We show that the introduction of the euro has increased Tobin's Q-ratios by 17.1% in the {euro-area} countries that previously had weak currencies. Part of the increase in corporate valuations is explained by the decrease in interest rates and by the decrease in the cost of equity. The increases in Tobin's Q are larger for firms that would be harmed by currency devaluations.