Cross-border Investments in emerging markets: a valuation perspective: Discussion.

Abstract

Significant amounts of capital are flowing from the developed world to emerging markets. But how do firms in the developed world allocate capital in emerging markets? How do they value investment opportunities in a cross-border investment in an emerging economy and deal with the various challenges that arise in the process? How do firms adjust for issues such as political risk, foreign exchange risk, and differences in institutional environments across borders? IIMB Management Review invited a panel comprising management practitioners, academics, policy makers and other stakeholders to discuss these issues and challenges. The panel debated a range of issues including the fundamental question of what drives capital flows into emerging markets; the micro perspective of corporate investment policy which included differences in industry practices and valuation techniques in developed and emerging markets, how companies from emerging markets viewed the outside world; how risks are accounted for in the asset pricing models; the role of taxation policies in influencing cross-border investments; how corporate governance is factored in valuation and the part played by organisation structure; how strategic opportunities affect valuation; and finally, how much of an art valuation is