BRIC IPOs: How Do Capital Market and Economic Activities in Emerging Markets Relate?

Authors

Abstract

Since the beginning of the millennium, the acronym BRIC has captivated the world and become synonymous with an extraordinary economic growth story that has defined the first decade of the 21st century. Along with newfound prosperity, entrepreneurs in the BRIC countries (Brazil, Russia, India and China) have been opening themselves up to further growth opportunities for investors all over the world through equity financing by issuing IPOs. This paper primarily attempts to explore the relationship between the capital market activities of the BRIC countries and their corresponding economic indicators. In the past decade, IPO activity has witnessed a rapid increase alongside BRIC's magnificent growth. The hypotheses of the research are supported by theories such as aggregate money demand, IPO incentives, and the investment process of emerging market companies. The subjects concerned are the total number of IPO issuances and the total monatary value of the issuances within the first decade of the millennium for all of the BRIC countries. Through conducting multilinear regressions of data collected from the SDC platinum database and the World Bank, this paper suggests that BRIC IPO deal numbers are highly contingent upon different factors of the economies with significant levels of relationships, and that the total deal proceeds in any given year for BRIC are highly contingent upon overall GDP and slightly contingent upon the overall size of the equity markets of BRIC measured by market capitalization.

Recommended Citation

(2012) "BRIC IPOs: How Do Capital Market and Economic Activities in Emerging Markets Relate?," Fordham Business Student Research Journal: Vol. 1: Iss. 2, Article 4.
Available at: https://research.library.fordham.edu/bsrj/vol1/iss2/4