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Domestic Investor Protection and Foreign Portfolio Investment

Maela Giofré

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

April 5, 2012

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.

Number of Pages in PDF File: 42

Keywords: International portfolio investments, Investor Protection Rights, Home bias

JEL Classification: G11, G15, G30

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Date posted: August 21, 2011 ; Last revised: April 6, 2012

Suggested Citation

Giofré, Maela, Domestic Investor Protection and Foreign Portfolio Investment (April 5, 2012). Available at SSRN: https://ssrn.com/abstract=1913285 or http://dx.doi.org/10.2139/ssrn.1913285

Contact Information

Maela Giofré (Contact Author)
University of Turin - Department of Economics and Statistics ( email )
Lungo Dora Siena 100/A
Torino, Turin - Piedmont 10153
CeRP-CCA ( email )
Via Real Collegio 30
Moncalieri (TO), Turin 10024
Netspar ( email )
P.O. Box 90153
Tilburg, 5000 LE
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