IDEAS home Printed from https://ideas.repec.org/a/taf/recgxx/v86y2010i1p75-98.html
   My bibliography  Save this article

Does Geography Still Matter? Evidence on the Portfolio Turnover of Large Equity Investors and Varieties of Capitalism

Author

Listed:
  • Claude Dupuy
  • Stéphanie Lavigne
  • Dalila Nicet-Chenaf

Abstract

This article investigates the geography of finance through a study of the behavior of large equity investors who are key actors in capitalism. The main argument is based on their expectations in “finance-driven” capitalism: large equity investors require high returns on invested capital in a shorter time and are said to be impatient. The article focuses on their portfolio turnover in relation to geographic factors and their attachment to a specific model of capitalism. The U.S. “market-based” model is presented as a benchmark, since U.S. investors trade securities most frequently relative to other international equity investors. Our empirical findings on the proximity of investors in various models of capitalism with U.S. “impatient” investors contribute to a growing literature on the economic importance of geography in understanding global finance.

Suggested Citation

  • Claude Dupuy & Stéphanie Lavigne & Dalila Nicet-Chenaf, 2010. "Does Geography Still Matter? Evidence on the Portfolio Turnover of Large Equity Investors and Varieties of Capitalism," Economic Geography, Taylor & Francis Journals, vol. 86(1), pages 75-98, January.
    • Handle: RePEc:taf:recgxx:v:86:y:2010:i:1:p:75-98
    DOI: 10.1111/j.1944-8287.2009.01055.x
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1111/j.1944-8287.2009.01055.x
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1111/j.1944-8287.2009.01055.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Gordon L. Clark, 2002. "London in the European financial services industry: locational advantage and product complementarities," Journal of Economic Geography, Oxford University Press, vol. 2(4), pages 433-453, October.
    2. Feldstein, Martin & Horioka, Charles, 1980. "Domestic Saving and International Capital Flows," Economic Journal, Royal Economic Society, vol. 90(358), pages 314-329, June.
    3. Clark, Gordon L. & Wojcik, Dariusz, 2007. "The Geography of Finance: Corporate Governance in the Global Marketplace," OUP Catalogue, Oxford University Press, number 9780199213368.
    4. Tesar, Linda L. & Werner, Ingrid M., 1995. "Home bias and high turnover," Journal of International Money and Finance, Elsevier, vol. 14(4), pages 467-492, August.
    5. Amable, Bruno, 2003. "The Diversity of Modern Capitalism," OUP Catalogue, Oxford University Press, number 9780199261147.
    6. Glassman, Debra A. & Riddick, Leigh A., 2001. "What causes home asset bias and how should it be measured?," Journal of Empirical Finance, Elsevier, vol. 8(1), pages 35-54, March.
    7. Rob Bauer & Robin Braun & Gordon L. Clark, 2008. "The emerging market for European corporate governance: the relationship between governance and capital expenditures, 1997-2005," Journal of Economic Geography, Oxford University Press, vol. 8(4), pages 441-469, July.
    8. Portes, Richard & Rey, Helene, 2005. "The determinants of cross-border equity flows," Journal of International Economics, Elsevier, vol. 65(2), pages 269-296, March.
    9. Michel Goyer, 2006. "Varieties of Institutional Investors and National Models of Capitalism: The Transformation of Corporate Governance in France and Germany," Politics & Society, , vol. 34(3), pages 399-430, September.
    10. French, Kenneth R & Poterba, James M, 1991. "Investor Diversification and International Equity Markets," American Economic Review, American Economic Association, vol. 81(2), pages 222-226, May.
    11. Andy Pike, 2006. "'Shareholder value' versus the regions: the closure of the Vaux Brewery in Sunderland," Journal of Economic Geography, Oxford University Press, vol. 6(2), pages 201-222, April.
    12. Britta Klagge & Ron Martin, 2005. "Decentralized versus centralized financial systems: is there a case for local capital markets?," Journal of Economic Geography, Oxford University Press, vol. 5(4), pages 387-421, August.
    13. La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei & Vishny, Robert, 2000. "Investor protection and corporate governance," Journal of Financial Economics, Elsevier, vol. 58(1-2), pages 3-27.
    14. Jean-Philippe BERROU (CED, IFReDE-GRES) & Christophe CARRINCAZEAUX (E3i, IFReDE-GRES), 2005. "Diversity of capitalism and Central and Eastern European Countries. A statistical analysis. (In French)," Cahiers du GRES (2002-2009) 2005-18, Groupement de Recherches Economiques et Sociales.
    15. Joshua D. Coval & Tobias J. Moskowitz, 1999. "Home Bias at Home: Local Equity Preference in Domestic Portfolios," Journal of Finance, American Finance Association, vol. 54(6), pages 2045-2073, December.
    16. Falkenstein, Eric G, 1996. "Preferences for Stock Characteristics as Revealed by Mutual Fund Portfolio Holdings," Journal of Finance, American Finance Association, vol. 51(1), pages 111-135, March.
    17. Schmidt, Vivien A., 2002. "The Futures of European Capitalism," OUP Catalogue, Oxford University Press, number 9780199253685.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Olivier Brossard & Stéphanie Lavigne & Mustafa Erdem Sakinç, 2013. "Ownership structures and R&D in Europe: the good institutional investors, the bad and ugly impatient shareholders," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 22(4), pages 1031-1068, August.
    2. Manuel Castelo Branco & Catarina Delgado & Carla Marques, 2018. "How do sustainability reports from the Nordic and the Mediterranean European countries compare," Review of Managerial Science, Springer, vol. 12(4), pages 917-936, October.
    3. Christophe CARRINCAZEAUX (E3I-IFReDE-GRES) & Frédéric GASCHET (IERSO-IFReDE-GRES), 2006. "Knowledge and the diversity of innovation systems: a comparative analysis of European regions," Cahiers du GRES (2002-2009) 2006-29, Groupement de Recherches Economiques et Sociales.
    4. Claude DUPUY & Matthieu MONTALBAN & Sylvain MOURA, 2009. "Finance and Industrial Dynamics (In French)," Cahiers du GREThA (2007-2019) 2009-24, Groupe de Recherche en Economie Théorique et Appliquée (GREThA).
    5. Claude Dupuy & Stephanie Lavigne & Dalila Chenaf-Nicet, 2016. "Where Do “Impatient” Mutual Funds Invest? A Special Attraction for Large Proximate Markets and Companies with Strategic Investors," Post-Print hal-03897273, HAL.
    6. Durand, Robert B. & Koh, SzeKee & Tan, Paul LiJian, 2013. "The price of sin in the Pacific-Basin," Pacific-Basin Finance Journal, Elsevier, vol. 21(1), pages 899-913.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Claude Dupuy & Stephanie Lavigne & Dalila Chenaf-Nicet, 2016. "Where Do “Impatient” Mutual Funds Invest? A Special Attraction for Large Proximate Markets and Companies with Strategic Investors," Post-Print hal-03897273, HAL.
    2. Claude DUPUY & Matthieu MONTALBAN & Sylvain MOURA, 2009. "Finance and Industrial Dynamics (In French)," Cahiers du GREThA (2007-2019) 2009-24, Groupe de Recherche en Economie Théorique et Appliquée (GREThA).
    3. Fang Cai & Francis E. Warnock, 2004. "International diversification at home and abroad," International Finance Discussion Papers 793, Board of Governors of the Federal Reserve System (U.S.).
    4. Bhattacharya, Utpal & Groznik, Peter, 2008. "Melting pot or salad bowl: Some evidence from U.S. investments abroad," Journal of Financial Markets, Elsevier, vol. 11(3), pages 228-258, August.
    5. Nicolas Coeurdacier & Hélène Rey, 2013. "Home Bias in Open Economy Financial Macroeconomics," Journal of Economic Literature, American Economic Association, vol. 51(1), pages 63-115, March.
    6. Portes, Richard & Rey, Helene, 2005. "The determinants of cross-border equity flows," Journal of International Economics, Elsevier, vol. 65(2), pages 269-296, March.
    7. Mishra, Anil V., 2015. "Measures of equity home bias puzzle," Journal of Empirical Finance, Elsevier, vol. 34(C), pages 293-312.
    8. Daly, Kevin & Vo, Xuan Vinh, 2013. "The determinants of home bias puzzle in equity portfolio investment in Australia," International Review of Financial Analysis, Elsevier, vol. 27(C), pages 34-42.
    9. Anil V. Mishra, 2017. "Foreign bias in Australia's international equity holdings," Review of Financial Economics, John Wiley & Sons, vol. 33(1), pages 41-54, April.
    10. Kalok Chan & Vicentiu Covrig & Lilian Ng, 2005. "What Determines the Domestic Bias and Foreign Bias? Evidence from Mutual Fund Equity Allocations Worldwide," Journal of Finance, American Finance Association, vol. 60(3), pages 1495-1534, June.
    11. 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.
    12. Lippi, Andrea, 2016. "(Country) Home bias in Italian occupational pension funds asset allocation choices," The Quarterly Review of Economics and Finance, Elsevier, vol. 59(C), pages 78-82.
    13. Shu Lin & Shu Tian & Eliza Wu, 2013. "Emerging Stars and Developed Neighbors: The Effects of Development Imbalance and Political Shocks on Mutual Fund Investments in China," Financial Management, Financial Management Association International, vol. 42(2), pages 339-371, June.
    14. Lee, Junyong & Lee, Kyounghun & Oh, Frederick Dongchuhl, 2023. "International portfolio diversification and the home bias puzzle," Research in International Business and Finance, Elsevier, vol. 64(C).
    15. Thomas Jeanjean & Hervé Stolowy & Michael Erkens, 2010. "Really “Lost in translation”? The economic consequences of issuing an annual report in English," Post-Print hal-00479511, HAL.
    16. repec:hal:wpspec:info:hdl:2441/c8dmi8nm4pdjkuc9g81p7j6b6 is not listed on IDEAS
    17. Fidora, Michael & Fratzscher, Marcel & Thimann, Christian, 2007. "Home bias in global bond and equity markets: The role of real exchange rate volatility," Journal of International Money and Finance, Elsevier, vol. 26(4), pages 631-655, June.
    18. repec:spo:wpecon:info:hdl:2441/c8dmi8nm4pdjkuc9g81p7j6b6 is not listed on IDEAS
    19. Jonathan Batten & Xuan Vinh Vo, 2010. "The determinates of equity portfolio holdings," Applied Financial Economics, Taylor & Francis Journals, vol. 20(14), pages 1125-1132.
    20. Anil Mishra, 2011. "Australia’s equity home bias and real exchange rate volatility," Review of Quantitative Finance and Accounting, Springer, vol. 37(2), pages 223-244, August.
    21. Mondria, Jordi & Wang, Xin & Wu, Thomas, 2021. "Familiarity and Surprises in International Financial Markets: Bad news travels like wildfire; good news travels slow," Journal of International Money and Finance, Elsevier, vol. 115(C).
    22. Sebnem Kalemli-Ozcan & Ariell Reshef & Bent E Sørensen & Oved Yosha, 2010. "Why Does Capital Flow to Rich States?," The Review of Economics and Statistics, MIT Press, vol. 92(4), pages 769-783, November.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:recgxx:v:86:y:2010:i:1:p:75-98. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/recg .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.