The economic globalization of the recent times has been identified by the internationalization of the production and expansion of international trade; at the same time the internationalization of financial capital has achieved a great development of capital markets. The main purpose of this type of market is to act as an intermediary, channeling new resources and saving investors, so that then the issuers can carry out financing and investment operations in their companies. “Capital Market Efficiency may be categorized on the basis of information, information on past prices, publicly available information and private information” (Akhter & Misir, 2005, p. 38).
Emerging capital markets are boosted in countries where their economy is not too high, and they are open to foreign capital. Which means that they are growing at a good pace and are in a phase of transition towards fully developed economies. Its growing participation in the world economy makes emerging markets attract the attention of investors. According to Kannadhasan, Thakur, Aramvalarthan & Radhakrishnan (2018) “in the recent years, Investors prefer to include emerging market in their international portfolio as they are less correlated to developed market” (p. 1). Emerging markets have also developed, expanded and specialized, and currently include several countries, which have different fundamentals, diverse economic growth patterns and often considerably divergent valuations. This promotes an increasing number of foreign investments, becoming an attractive destination market.
Increasing high quality financial availability in emerging capital markets is necessary to encourage growth and stability, which are indicators that give investors' confidence and clarity in the framework of world trade. Among some of the approaches that help to solve this issue are demographic and economic diversity. Therefore, when preparing financial data, a sample should be taken that covers all the required documents so that the best possible information can be extracted, and exorbitant prices or unrealistic returns should never be used for financial analysis. According to Saudagaran & Diga (1997) “availability, reliability and comparability provide useful criteria for evaluating and comparing the state of financial reporting in emerging capital markets” (p. 41). In these approaches, the relationship between these criteria is investigated, where the availability of information was evaluated by analyzing the scope and quality of the disclosures that allow for adequate decision making. Reliability was connected to national accounting standards and their application in the country. Finally, comparability contains two aspects of study, the differences in national accounting standards a and the contextual framework for the analysis of accounting data. All this leads to a better quality of financial information (Saudagaran & Diga, 1997).
References
Akhter, S., Misir, M. A. (2005). Capital markets efficiency: Evidence from the emerging capital market with Particular reference to Dhaka stock exchange. South Asian Journal of Management, 12(3), 35-51. Retrieved from https://063442ij5-mp03-y-https-search-proquest-com.prx-keiser.lirn.net/docview/222722546/fulltextPDF/47E8FBD2C11241D8PQ/1?accountid=35796
Kannadhasan, M., Thakur, B. P., Aramvalarthan, S., Radhakrishnan, A. (2018). Modelling volatility in emerging capital market: The case of Indian capital market. Academy of Accounting and Financial Studies Journal, 22(1), 1-11. Retrieved from https://063442ij5-mp03-y-https-search-proquest-com.prx-keiser.lirn.net/docview/2025302876/47E8FBD2C11241D8PQ/5?accountid=35796
Saudagaran, S. M., Diga, J. G. (1997). Financial reporting in emerging capital markets: Characteristics and policy issues. Accounting Horizons, 11(2), 41-64. Retrieved from https://063442il1-mp03-y-https-search-proquest-com.prx-keiser.lirn.net/docview/208897546/FEE3D5E930B940BDPQ/2?accountid=35796