Cultural influences on home bias and international diversification by institutional investors
We investigate determinants of international diversification in institutionally managed portfolios from more than 60 countries. Survey-based country-specific variables on cross-cultural behaviors help to explain both home bias and diversification among foreign equities. In particular, investment funds from countries characterized by higher uncertainty avoidance behavior display greater home bias and are less diversified in their foreign holdings. Portfolios from countries with higher levels of masculinity and long-term orientation display lower levels of home bias, and portfolios from countries with higher levels of masculinity are more diversified abroad. Portfolios from culturally distant countries invest less abroad and underweight culturally distant target markets. The economic significance of cultural variables is high and comparable in magnitude to geographical distance, a consistent influence on foreign diversification in prior studies. Culture impacts investor behavior directly and not merely though indirect channels such as legal and regulatory framework.
Year of publication: |
2011
|
---|---|
Authors: | Anderson, Christopher W. ; Fedenia, Mark ; Hirschey, Mark ; Skiba, Hilla |
Published in: |
Journal of Banking & Finance. - Elsevier, ISSN 0378-4266. - Vol. 35.2011, 4, p. 916-934
|
Publisher: |
Elsevier |
Keywords: | Home bias International diversification Culture Portfolio choice |
Saved in:
Online Resource
Saved in favorites
Similar items by person
-
Cultural influences on home bias and international diversification by institutional investors
Anderson, Christopher W., (2011)
-
Cultural influences on home bias and international diversification by institutional investors
Anderson, Christopher W., (2011)
-
Information immobility, industry concentration, and institutional investor's performance
Fedenia, Mark, (2012)
- More ...