Foreign Ownership Restrictions and Equity price Premiums: Explaining the High Cost of International Diversification
AbstractCompanies in many countries have designated shares restricted to locals and otherwise identical unrestricted shares available to foreigners. With the ever-increasing demand for international portfolio investments, these foreign ownership restrictions typically lead to large price premiums for unrestricted shares relative to otherwise identical restricted shares. The price premiums are a substantial additional cost to foreign portfolio investment. Using data from eleven countries with binding foreign ownership limits, we explore the relative pricing of restricted and unrestricted shares with a variety of concepts from the finance literature.
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Bibliographic InfoPaper provided by The A. Gary Anderson Graduate School of Management. University of California Riverside in its series The A. Gary Anderson Graduate School of Management with number 97-10.
Length: 53 pages
Date of creation: 1997
Date of revision:
Contact details of provider:
Postal: The A. Gary Anderson Graduate School of Management. University of California, Riverside. Riverside CA 92521
Web page: http://www.agsm.ucr.edu/
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INVESTMENTS ; FINANCIAL MARKET ; PRICING;
Find related papers by JEL classification:
- G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
- G13 - Financial Economics - - General Financial Markets - - - Contingent Pricing; Futures Pricing
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
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