THE EURO AND CORPORATE VALUATIONS: THE CASE OF GREECE

This paper investigates the impact of the euro on corporate valuations in Greece. Previous empirical results for the ten countries that founded the Monetary Union (EMU) uncovered various positive effects of the common currency. Greece who joined EMU later, coming from a weaker macroeconomic background is expected to benefit substantially from the strong commitment of being part of a currency union. Our results show comparably stronger impact of the euro for Greece than for the founding members of EMU. The common currency has brought a 24% increase in Tobin’s q for Greek companies and the investment ratio has increased by 21%. The wave of investment was primarily financed by equity issues.