Country-Specific Sentiment and Security Prices

49 Pages Posted: 3 Aug 2008 Last revised: 29 Jul 2010

See all articles by Byoung-Hyoun Hwang

Byoung-Hyoun Hwang

Cornell University - Dyson School of Applied Economics and Management; Korea University - Department of Finance

Date Written: July 28, 2010

Abstract

I study the effect of country-specific sentiment on security prices. I provide evidence that a country’s popularity among Americans affects U.S. investors’ demand for securities from that country and causes security prices to deviate from their fundamental values. Moreover, I find that country popularity is positively associated with the intensity of U.S. cross-border mergers and acquisitions activity, suggesting that country popularity also affects firms’ investment decisions.

Keywords: Investor Sentiment, Country Popularity

JEL Classification: G12, G14, G15

Suggested Citation

Hwang, Byoung-Hyoun, Country-Specific Sentiment and Security Prices (July 28, 2010). Journal of Financial Economics (JFE), Forthcoming. Available at SSRN: https://ssrn.com/abstract=1195317 or http://dx.doi.org/10.2139/ssrn.1195317

Byoung-Hyoun Hwang (Contact Author)

Cornell University - Dyson School of Applied Economics and Management ( email )

Ithaca, NY
United States

HOME PAGE: http://www.bhwang.com

Korea University - Department of Finance

Seoul, 136-701
United States

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