Does stock market valuation take into account the international diversification of listed companies?

- "Large companies have diversified their turnover internationally. We seek to ascertain whether investors associate these companies too closely with the countries where they are quoted. This would create an abnormally close link between the trend in these companies’ share prices and changes in the macroeconomic situation of the countries where they are quoted, while stock
market prices ought to react far more to the international macroeconomic situation."
- "We show:
• that the financial markets do not take into account the geographical structure of the turnover of listed companies;
• but that they give significant weight to the trend in the country’s exchange rate compared with these markets of listed companies."

Natixis Flash Economics 379 20100727