Domestic Investor Protection and Foreign Portfolio Investment
44 Pages Posted: 21 Aug 2011 Last revised: 30 Mar 2022
Abstract
This paper investigates the impact of domestic investor protection on equity cross-border investment. We bring to light a lower sensitivity of foreign investment to destination countries' corporate governance for those investors enjoying a higher degree of investor protection at home. This evidence is consistent with the conjecture that high standards of corporate governance at home make investors less familiar with problems related to weak investor protection and then less sensitive to this issue when choosing the composition of their foreign portfolio. As an ensuing perverse effect, assets issued by well protected foreign countries are those more severely penalized in portfolios held by investing countries featuring stronger investor protection.
Keywords: International portfolio investments, Investor Protection Rights, Home bias
JEL Classification: G11, G15, G30
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Why is There a Home Bias? An Analysis of Foreign Portfolio Equity Ownership in Japan
By Jun-koo Kang and René M. Stulz
-
By Gur Huberman
-
Home Bias and the High Turnover
By Linda L. Tesar and Ingrid M. Werner
-
The Determinants of Cross-Border Equity Flows
By Richard Portes and Hélène Rey
-
Corporate Governance and the Home Bias
By Lee Pinkowitz, Rohan Williamson, ...
-
The Determinants of Cross-Border Equity Flows
By Richard Portes and Hélène Rey
-
The Portfolio Flows of International Investors, I
By Kenneth Froot, Paul G.j. O'connell, ...
-
The Information Content of International Portfolio Flows
By Kenneth Froot and Tarun Ramadorai
-
The Information Content of International Portfolio Flows
By Kenneth Froot and Tarun Ramadorai