Corporate Governance, Investor Protection, and the Home Bias
If investors are poorly protected, it is optimal for firms to be closely held because selling shares to minority shareholders is otherwise too expensive. Empirically, most firms in countries with poor investor protection are closely held so that investors cannot hold the market portfolio. We show that the prevalence of closely held firms in countries with poor investor protection explains part of the home bias of U.S. investors. We construct an estimate of the world portfolio of shares available to investors who are not controlling shareholders (the world float portfolio). The world float portfolio differs sharply from the world market portfolio. In regressions explaining the portfolio weights of U.S. investors, the world float portfolio has a positive significant coefficient but the world market portfolio has no additional explanatory power. This result holds when we control for country characteristics. An analysis of foreign investor holdings at the firm level for Sweden confirms the importance of the float portfolio as a determinant of these holdings
Year of publication: |
[2012]
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Authors: | Dahlquist, Magnus |
Other Persons: | Pinkowitz, Lee (contributor) ; Stulz, René M. (contributor) ; Williamson, Rohan (contributor) |
Publisher: |
[2012]: [S.l.] : SSRN |
Saved in:
freely available
Extent: | 1 Online-Ressource (48 p) |
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Type of publication: | Book / Working Paper |
Notes: | Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments June 2002 erstellt |
Other identifiers: | 10.2139/ssrn.320222 [DOI] |
Source: | ECONIS - Online Catalogue of the ZBW |
Persistent link: https://www.econbiz.de/10012713594
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