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http://ssrn.com/abstract=227067
 
 

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Home Bias and the High Turnover


Linda L. Tesar


University of Michigan at Ann Arbor - Department of Economics; National Bureau of Economic Research (NBER)

Ingrid M. Werner


The Ohio State University - Fisher College of Business

November 1992

NBER Working Paper No. w4218

Abstract:     
This paper documents the available evidence on international portfolio investment in five GECD countries. We draw three conclusions from the data. First. there is strong evidence of a home bias in national investment portfolios despite the potential gains from international diversification. Second, to the extent investors hold international securities, the composition of the portfolio of foreign securities seems to reflect factors other than diversification of risk. Third, the high volume of cross-border capital flows and the high turnover rate on foreign equity investments relative to domestic equity markets suggests that transactions costs and incomplete information are unlikely to be important deterrents to international investment. These observations suggest that a richer set of models is required to account for international investment behavior.

Number of Pages in PDF File: 52

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Date posted: May 26, 2004  

Suggested Citation

Tesar, Linda L. and Werner, Ingrid M., Home Bias and the High Turnover (November 1992). NBER Working Paper No. w4218. Available at SSRN: http://ssrn.com/abstract=227067

Contact Information

Linda L. Tesar (Contact Author)
University of Michigan at Ann Arbor - Department of Economics ( email )
611 Tappan Street
Ann Arbor, MI 48109-1220
United States
734-763-2254 (Phone)
734-764-2769 (Fax)
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Ingrid M. Werner
The Ohio State University - Fisher College of Business ( email )
2100 Neil Avenue
Columbus, OH 43210-1144
United States
614-292-6460 (Phone)
614-292-2418 (Fax)

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