U.S. International Equity Investment

70 Pages Posted: 4 Apr 2012

See all articles by John Ammer

John Ammer

U.S. Federal Reserve Board of Governors

Sara B. Holland

University of Oklahoma - Michael F. Price College of Business

David C. Smith

University of Virginia - McIntire School of Commerce

Francis E. Warnock

University of Virginia - Darden Business School; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: March 2, 2012

Abstract

U.S. investors are the largest group of international equity investors in the world, but to date conclusive evidence on which types of foreign firms are able to attract U.S. investment is not available. Using a comprehensive dataset of all U.S. investment in foreign equities, we find that the single most important determinant of the amount of U.S. investment a foreign firm receives is whether the firm cross-lists on a U.S. exchange. Correcting for selection biases, cross-listing leads to a doubling (or more) in U.S. investment, an impact greater than all other factors combined. We also show that our firm-level analysis has implications for country-level studies, suggesting that research investigating equity investment patterns at the country-level should include cross-listing as an endogenous control variable. We describe easy-to-implement methods for including the importance of cross-listing at the country level.

Keywords: Home bias, portfolio choice, financial disclosure, corporate governance

JEL Classification: G11, F21, C35

Suggested Citation

Ammer, John Matthew and Holland, Sara B. and Smith, David Carl and Warnock, Francis E., U.S. International Equity Investment (March 2, 2012). FRB International Finance Discussion Paper No. 1044; Darden Business School Working Paper No. 2033181. Available at SSRN: https://ssrn.com/abstract=2033181 or http://dx.doi.org/10.2139/ssrn.2033181

John Matthew Ammer (Contact Author)

U.S. Federal Reserve Board of Governors ( email )

20th & C Streets NW
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Sara B. Holland

University of Oklahoma - Michael F. Price College of Business ( email )

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Norman, OK 73019-4004
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David Carl Smith

University of Virginia - McIntire School of Commerce ( email )

P.O. Box 400173
Charlottesville, VA 22904-4173
United States

Francis E. Warnock

University of Virginia - Darden Business School ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-6076 (Phone)

HOME PAGE: http://faculty.darden.virginia.edu/warnockf/index.htm

National Bureau of Economic Research (NBER) ( email )

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Cambridge, MA 02138-5398

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