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Bias in foreign equity portfolios: households versus professional investors

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Author Info
Giofré, Maela/M.

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Abstract

Non professional investors display a much higher degree of home bias than fiancial investors suggesting that they might be more severely a¤ected by information asymmetry issues. In particular, non professional investors, having less easily access to information on foreign firm-specific characteristics than institutional investors, will rely more heavily on country-specific factors. We test this conjecture restricting the analysis to foreign equity portfolios of four European investing countries -France, Italy, Spain and Sweden. We find, indeed, that households’ portfolios are more strongly in‡uenced by proximity variables, transparency of the destination stock market and, even more interestingly, by common-listing in the Euronext platform.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 13929.

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Date of creation: 2008
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Handle: RePEc:pra:mprapa:13929

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Related research
Keywords: portfolio choice; international diversification; information asymmetries; cross-listing; household finance;

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Find related papers by JEL classification:
G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
F30 - International Economics - - International Finance - - - General
G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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