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Home Bias, an Academic Puzzle

49 Pages Posted: 27 Sep 2012  

George Andrew Karolyi

Cornell University - Johnson Graduate School of Management

Date Written: September 27, 2012


Only 23% of all empirical studies published in the top journals in the field of Finance examine non-U.S. markets, a fraction that is well below measures that reflect their economic importance. This “home bias” fluctuates across years over the last two decades but with no discernible trend in any direction. There is also a “foreign bias” in which some non-U.S. countries are more frequently the subject of published papers than others. I am unable to explain much of either the home-bias or the foreign-bias puzzles in Finance research using a variety of supply factors (number of published authors affiliated with non-U.S. universities, number of Ph.D. students graduating from non-U.S. programs), demand factors (market returns, volatilities, portfolio flows), and other factors that have been shown to explain the home- and foreign-bias phenomenon in international portfolio holdings. I discuss the implications of these findings.

Keywords: International finance, Globalization, Research trends in finance

JEL Classification: G10, F60, A14

Suggested Citation

Karolyi, George Andrew, Home Bias, an Academic Puzzle (September 27, 2012). Available at SSRN: or

George Karolyi (Contact Author)

Cornell University - Johnson Graduate School of Management ( email )

Ithaca, NY 14853
United States

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