IDEAS home Printed from https://ideas.repec.org/p/hal/journl/hal-03642469.html
   My bibliography  Save this paper

The Determinants of International Equity Holdings: Information vs. Culture

Author

Listed:
  • 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-03642469v1
    as

    Download full text from publisher

    File URL: https://hal.science/hal-03642469v1/document
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. repec:spo:wpecon:info:hdl:2441/c8dmi8nm4pdjkuc9g708pipbp is not listed on IDEAS
    2. 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.
    3. repec:hal:spmain:info:hdl:2441/c8dmi8nm4pdjkuc9g708pipbp is not listed on IDEAS
    4. 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.
    5. repec:hal:wpspec:info:hdl:2441/c8dmi8nm4pdjkuc9g708pipbp is not listed on IDEAS
    6. repec:spo:wpmain:info:hdl:2441/c8dmi8nm4pdjkuc9g708pipbp is not listed on IDEAS
    7. 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.
    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. 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.

    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. 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.
    2. repec:hal:wpspec:info:hdl:2441/c8dmi8nm4pdjkuc9g81p7j6b6 is not listed on IDEAS
    3. Haoyuan Ding & Xiao Li & Jiezhou Ying, 2023. "Anti‐dumping Policies and International Portfolio Allocation: The View from the Global Funds," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 31(2), pages 58-83, March.
    4. repec:spo:wpecon:info:hdl:2441/c8dmi8nm4pdjkuc9g81p7j6b6 is not listed on IDEAS
    5. Claudia M. Buch & John C. Driscoll & Charlotte Ostergaard, 2010. "Cross‐Border Diversification in Bank Asset Portfolios," International Finance, Wiley Blackwell, vol. 13(1), pages 79-108, March.
    6. Balli, Faruk & Basher, Syed Abul & Rana, Faisal, 2014. "The determinants of the volatility of returns on cross-border asset holdings," Journal of International Money and Finance, Elsevier, vol. 44(C), pages 1-23.
    7. van Wincoop, Eric & Warnock, Francis E., 2010. "Can trade costs in goods explain home bias in assets?," Journal of International Money and Finance, Elsevier, vol. 29(6), pages 1108-1123, October.
    8. repec:spo:wpmain:info:hdl:2441/c8dmi8nm4pdjkuc9g81p7j6b6 is not listed on IDEAS
    9. repec:hal:spmain:info:hdl:2441/c8dmi8nm4pdjkuc9g81p7j6b6 is not listed on IDEAS
    10. Nicolas Coeurdacier & Hélène Rey, 2010. "Home bias in open economy financial macroeconomics," SciencePo Working papers hal-01069440, HAL.
    11. M. Leroch & C. Reggiani & G. Rossini & E. Zucchelli, 2012. "Religious attitudes and home bias: theory and evidence from a pilot study," Working Papers wp811, Dipartimento Scienze Economiche, Universita' di Bologna.
    12. Coeurdacier, Nicolas, 2009. "Do trade costs in goods market lead to home bias in equities?," Journal of International Economics, Elsevier, vol. 77(1), pages 86-100, February.
    13. Bong‐Chan Kho & René M. Stulz & Francis E. Warnock, 2009. "Financial Globalization, Governance, and the Evolution of the Home Bias," Journal of Accounting Research, Wiley Blackwell, vol. 47(2), pages 597-635, May.
    14. 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.
    15. Mishra, Anil V., 2015. "Measures of equity home bias puzzle," Journal of Empirical Finance, Elsevier, vol. 34(C), pages 293-312.
    16. Vermeulen, Robert, 2013. "International diversification during the financial crisis: A blessing for equity investors?," Journal of International Money and Finance, Elsevier, vol. 35(C), pages 104-123.
    17. Okawa, Yohei & van Wincoop, Eric, 2012. "Gravity in International Finance," Journal of International Economics, Elsevier, vol. 87(2), pages 205-215.
    18. Giofré, Maela, 2009. "The role of information asymmetries and inflation hedging in international equity portfolios," Journal of Multinational Financial Management, Elsevier, vol. 19(4), pages 237-255, October.
    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. Bose, Udichibarna & MacDonald, Ronald & Tsoukas, Serafeim, 2015. "Education and the local equity bias around the world," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon TN 2015-76, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    21. Mercado, Rogelio V., 2023. "Bilateral capital flows: Transaction patterns and gravity," International Review of Economics & Finance, Elsevier, vol. 84(C), pages 39-54.
    22. Ansgar Belke & Clemens Domnick, 2021. "Trade and capital flows: Substitutes or complements? An empirical investigation," Review of International Economics, Wiley Blackwell, vol. 29(3), pages 573-589, August.
    23. Coeurdacier, Nicolas & Gourinchas, Pierre-Olivier, 2016. "When bonds matter: Home bias in goods and assets," Journal of Monetary Economics, Elsevier, vol. 82(C), pages 119-137.
    24. Mishra, Anil V. & Anwar, Sajid, 2017. "Foreign portfolio equity holdings and capital gains taxation," International Review of Financial Analysis, Elsevier, vol. 51(C), pages 54-68.

    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:hal:journl:hal-03642469. 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: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    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.