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The Determinants of International Equity Holdings: Information vs. Culture

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  • Erkin Diyarbakirlioglu

    (IRG - Institut de Recherche en Gestion - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12 - Université Gustave Eiffel)

Abstract

I examine whether the effect of physical distance on the geography of international portfolio investments undergoes an informational or a cultural channel. Using two measures to disentangle the effects of the physical distance, namely the cultural distance proposed by Kogut and Singh (1988), and a new measure of the information distance, I analyze a panel dataset showing 24 source countries' bilateral equity holdings in various destinations as of the end-2006. Regressions suggest that the effect of the geography on international portfolio investments is likely to be a phenomenon linked to information asymmetries rather than one reflecting the impact of the cultural proximity between countries.

Suggested Citation

  • Erkin Diyarbakirlioglu, 2011. "The Determinants of International Equity Holdings: Information vs. Culture," Post-Print hal-03642469, HAL.
    • Handle: RePEc:hal:journl:hal-03642469
    Note: View the original document on HAL open archive server: https://hal.science/hal-03642469
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    References listed on IDEAS

    as
    1. Aviat, Antonin & Coeurdacier, Nicolas, 2007. "The geography of trade in goods and asset holdings," Journal of International Economics, Elsevier, vol. 71(1), pages 22-51, March.
    2. repec:hal:spmain:info:hdl:2441/c8dmi8nm4pdjkuc9g708pipbp is not listed on IDEAS
    3. Ahearne, Alan G. & Griever, William L. & Warnock, Francis E., 2004. "Information costs and home bias: an analysis of US holdings of foreign equities," Journal of International Economics, Elsevier, vol. 62(2), pages 313-336, March.
    4. repec:hal:wpspec:info:hdl:2441/c8dmi8nm4pdjkuc9g708pipbp is not listed on IDEAS
    5. Adler, Michael & Dumas, Bernard, 1983. "International Portfolio Choice and Corporation Finance: A Synthesis," Journal of Finance, American Finance Association, vol. 38(3), pages 925-984, June.
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    Cited by:

    1. Annie Tubadji & Peter Nijkamp, 2015. "Cultural Gravity Effects among Migrants: A Comparative Analysis of the EU15," Economic Geography, Taylor & Francis Journals, vol. 91(3), pages 343-380, July.
    2. Annie Tubadji & Peter Nijkamp, 2013. "Cultural Distance and Gravity Effects among Migrants," ERSA conference papers ersa13p484, European Regional Science Association.

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