Foreign Investment under the Spotlight of Home Media

Journal of Money, Credit and Banking

57 Pages Posted: 18 Feb 2021 Last revised: 4 Jan 2022

See all articles by Wai-Man Liu

Wai-Man Liu

Australian National University

Jing Yu

The University of Sydney; Financial Research Network (FIRN)

Bohui Zhang

The Chinese University of Hong Kong, Shenzhen

Date Written: August 22, 2021

Abstract

This study examines the informational role of home media for foreign equity investment. Using a large sample of 38 host countries, we document a positive association between U.S. mutual fund ownership in a local stock and the coverage of U.S. major news providers on that stock. In addition to the conventional information dissemination and attention-grabbing media effects, we provide evidence of a novel home media effect that professional investors tend to entrust their home media in their foreign investments. Finally, our findings help explain the international finance anomaly regarding the dependence of firm returns on home and foreign market factors.

Keywords: Foreign equity investment; Foreign mutual fund; Media coverage; Home media bias

JEL Classification: F21; F23; G23

Suggested Citation

Liu, Wai-Man and Yu, Jing and Zhang, Bohui, Foreign Investment under the Spotlight of Home Media (August 22, 2021). Journal of Money, Credit and Banking, Available at SSRN: https://ssrn.com/abstract=3754609 or http://dx.doi.org/10.2139/ssrn.3754609

Wai-Man Liu

Australian National University ( email )

Canberra, Australian Capital Territory 2601
Australia

HOME PAGE: http://https://www.cbe.anu.edu.au/about/staff-directory/?profile=Wai-Man%20(Raymond)-Liu

Jing Yu (Contact Author)

The University of Sydney ( email )

University of Sydney
Sydney, NSW 2006
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Bohui Zhang

The Chinese University of Hong Kong, Shenzhen ( email )

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