Foreign Ownership Restrictions and Equity price Premiums: Explaining the High Cost of International Diversification
Companies 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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|Date of creation:||1997|
|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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