Seeing is Believing: Tourism and International Equity Investments

56 Pages Posted: 13 Nov 2018 Last revised: 9 Sep 2022

See all articles by Constantinos Antoniou

Constantinos Antoniou

University of Warwick - Warwick Business School

Carina Cuculiza

Marquette University

Alok Kumar

University of Miami - Miami Herbert Business School

Lizhengbo Yang

University of Warwick - Warwick Business School

Date Written: July 25, 2022

Abstract

We examine whether international tourism affects financial market investments. Using data for more than 40 countries, we show that recreational travel is associated with higher levels of foreign equity investments. This increase in foreign equity investment causes a reduction in the home bias. The impact of tourism is stronger for countries that are farther apart and countries with more risk averse residents. Using a scenery-related predictor of recreational travel as an instrument, we show that the relation between foreign travel and foreign equity investments is causal. Collectively, these results suggest that tourism has positive externalities in financial markets.

Keywords: International tourism, foreign equity investments, home bias, familiarity.

JEL Classification: G11, G15

Suggested Citation

Antoniou, Constantinos and Cuculiza, Carina and Kumar, Alok and Yang, Lizhengbo, Seeing is Believing: Tourism and International Equity Investments (July 25, 2022). Available at SSRN: https://ssrn.com/abstract=3270813 or http://dx.doi.org/10.2139/ssrn.3270813

Constantinos Antoniou (Contact Author)

University of Warwick - Warwick Business School ( email )

Coventry CV4 7AL
United Kingdom

Carina Cuculiza

Marquette University ( email )

P.O. Box 1881
Milwaukee, WI 53201-1881
United States

Alok Kumar

University of Miami - Miami Herbert Business School ( email )

512B Jenkins Building
Department of Finance
Coral Gables, FL 33124-6552
United States
305-284-1882 (Phone)

HOME PAGE: http://moya.bus.miami.edu/~akumar

Lizhengbo Yang

University of Warwick - Warwick Business School ( email )

Coventry CV4 7AL
United Kingdom

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