International diversification strategy: Emerging versus esta

A study uses a financial performance measure to determine whether a basic corporate strategy, portfolio management, is appropriate in countries with emerging capital markets. Specifically, the study estimates and compares the risk-return relationships of 5 emerging and 3 established securities markets over the decade of the 1980s and 2 subperiods. The results of the empirical analysis show that, for the 11 countries considered, there is no substantial difference in risk-adjusted market performance, as measured in US dollars, between established and emerging markets. Thus, no support is found of the international corporate strategy known as portfolio management based on relative capital market inefficiencies.