Bias in Foreign Equity Portfolios: Households Versus Professional Investors

41 Pages Posted: 11 Feb 2009

See all articles by Maela Giofré

Maela Giofré

University of Turin - Department of Economics and Statistics; CeRP-CCA; Netspar

Date Written: February 10, 2009

Abstract

Non professional investors display a much higher degree of home bias than financial investors suggesting that they might be more severely affected by information asymmetry issues. In particular, non professional investors, having less easily access to information on foreign firm-specific characteristics than institutional investors, will rely more heavily on country-specific factors. We test this conjecture restricting the analysis to foreign equity portfolios of four European investing countries - France, Italy, Spain and Sweden. We find, indeed, that households' portfolios are more strongly influenced by proximity variables, transparency of the destination stock market and, even more interestingly, by common-listing in the Euronext platform.

Keywords: portfolio choice, international diversification, information asymmetries, cross-listing, household finance

JEL Classification: F30, G11, G15

Suggested Citation

Giofré, Maela, Bias in Foreign Equity Portfolios: Households Versus Professional Investors (February 10, 2009). Available at SSRN: https://ssrn.com/abstract=1340342 or http://dx.doi.org/10.2139/ssrn.1340342

Maela Giofré (Contact Author)

University of Turin - Department of Economics and Statistics ( email )

Lungo Dora Siena 100/A
Torino, Turin - Piedmont 10153
Italy

CeRP-CCA ( email )

Via Real Collegio 30
Moncalieri (TO), Turin 10024
Italy

Netspar ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

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