Abstract
This chapter combines financial data with research on the geography of the German capital market in order to assess the relationship between corporate governance and stock price volatility. It argues that the informational efficiency and integration of European capital markets are low. The second section of the chapter presents the argument in the light of the existing research on the geography of finance. The third section introduces basic issues of investment theory such as market efficiency and its relationship with integration. It also outlines the effects both of these phenomena can have on investment strategies. The fourth section presents evidence on the factors affecting market integration and efficiency in Europe, focusing on the role of information and market transparency. The fifth section analyses in detail the structure and performance of the German stock market. The implications of the authors' findings for the current state of investment management in Europe are noted in the penultimate section. The final section summarizes findings and links the results to recent debate about path dependence.
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