Equity Home Bias In International Finance

Author : KAVOUS. ARDALAN
Publisher : Routledge
Page : 242 pages
File Size : 41,7 Mb
Release : 2020-12-18
Category : Electronic
ISBN : 0367729199

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Equity Home Bias in International Finance by KAVOUS. ARDALAN Pdf

This book provides a comprehensive and critical analysis of research outcomes on the equity home bias puzzle - that people overinvest in domestic stocks relative to the theoretically optimal investment portfolio. It introduces place attachment - the bonding that occurs between individuals and their meaningful environments - as a new explanation for equity home bias, and presents a philosophically multi-paradigmatic view of place attachment. For the first time, a comprehensive and up-to-date review of the extant literature is provided, demonstrating that place attachment is a contributing factor to 22 different topics in which variations of home bias are present. The author also analyses the social-psychological underpinnings of place attachment, and considers the effect of multi-culturalism on the future of equity home bias. The book's unique approach discusses the issues in conceptual terms rather than through data and statistical methods. This multi- and inter-disciplinary book is an invaluable resource for graduate students and researchers interested in economics, finance, philosophy, and/or methodology, introducing them to a new line of research.

Author : Kavous Ardalan
Publisher : Routledge
Page : 393 pages
File Size : 42,6 Mb
Release : 2019-05-17
Category : Business & Economics
ISBN : 9781000008272

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Equity Home Bias in International Finance by Kavous Ardalan Pdf

This book provides a comprehensive and critical analysis of research outcomes on the equity home bias puzzle – that people overinvest in domestic stocks relative to the theoretically optimal investment portfolio. It introduces place attachment – the bonding that occurs between individuals and their meaningful environments – as a new explanation for equity home bias, and presents a philosophically multi-paradigmatic view of place attachment. For the first time, a comprehensive and up-to-date review of the extant literature is provided, demonstrating that place attachment is a contributing factor to 22 different topics in which variations of home bias are present. The author also analyses the social-psychological underpinnings of place attachment, and considers the effect of multi-culturalism on the future of equity home bias. The book’s unique approach discusses the issues in conceptual terms rather than through data and statistical methods. This multi- and inter-disciplinary book is an invaluable resource for graduate students and researchers interested in economics, finance, philosophy, and/or methodology, introducing them to a new line of research.

Author : Ian Cooper,Piet Sercu,Rosanne Vanpée
Publisher : Unknown
Page : 133 pages
File Size : 47,6 Mb
Release : 2013
Category : International finance
ISBN : 1601987633

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The Equity Home Bias Puzzle by Ian Cooper,Piet Sercu,Rosanne Vanpée Pdf

Home bias - the empirical phenomenon that investors assign anomalously high weights to their own domestic assets - has puzzled academics for decades: financial theory predicts that an internationally well diversified portfolio of stocks and short-term bonds can reduce risk significantly without affecting expected return. Although the globalization of international equity markets has increased international investments, equity portfolios remain severely home biased today, and no single explanation seems to solve the puzzle completely. In this paper, we first provide a thorough description of the equity home bias phenomenon by defining, discussing, and applying the competing measures and presenting some estimates of the costs of under-diversification. Second, we evaluate the explanations for the equity home bias proposed in the literature such as information asymmetries, behavioral aspects, barriers to foreign investment, and governance issues, and conclude that each explanation on its own falls short, suggesting that the equity home bias probably reflects a combination of factors. Lastly, we review the implications of international under-diversification for portfolio formation and the cost of capital of companies.

Author : Ian Cooper,Piet Sercu,Rosanne Vanpee
Publisher : Unknown
Page : 133 pages
File Size : 54,8 Mb
Release : 2013-12-01
Category : Business & Economics
ISBN : 1601987625

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The Equity Home Bias Puzzle by Ian Cooper,Piet Sercu,Rosanne Vanpee Pdf

After an introduction, this book defines the equity home bias puzzle and explains why it is important. It also reviews the two main methods used to quantify equity home bias, the positive and normative approaches, and shows how alternative home bias measures can be constructed using variations or combinations of these two methods.

Author : Karen K. Lewis
Publisher : Unknown
Page : 80 pages
File Size : 48,7 Mb
Release : 1998
Category : Business cycles
ISBN : OSU:32435057622698

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International Home Bias in International Finance and Business Cycles by Karen K. Lewis Pdf

Domestic investors hold a substantially larger proportion of their wealth portfolios in domestic assets than standard portfolio theory would suggest. This phenomenon has been called equity home bias. In the absence of this home bias, investors would optimally diversify away domestic output risk. Therefore, in a world without investor home bias, consumption growth rates would tend to comove across countries even when output growth rates do not. Empirically, however, consumption growth rates tend to have a lower correlation across countries than do output growth rates. Moreover, consumption growth in each country appears to be highly correlated with its own output growth relative to the world. This phenomenon may be called consumption home bias. In this paper, I evaluate existing explanations for these two types of home bias.

Author : Colin Gilligan,Kavous Ardalan,William Richardson
Publisher : Routledge
Page : 0 pages
File Size : 51,7 Mb
Release : 2019-06-17
Category : Business & Economics
ISBN : 0415004403

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Equity Home Bias in International Finance by Colin Gilligan,Kavous Ardalan,William Richardson Pdf

This book provides a comprehensive and critical analysis of research outcomes on the equity home bias puzzle. It introduces "place attachment" as a new explanation for the "equity home bias" puzzle and looks to the future of place attachment and its effect on home bias. For the first time, a comprehensive and up-to-date review of the extant literature is provided. The author presents a philosophically multi-paradigmatic view of "place attachment" - the bonding that occurs between individuals and their meaningful environments. Offering an overview of the literature on 22 different topics in which variations of "home bias" are present, the author demonstrates that place attachment is a contributing factor to all of these. Finally, the author analyses the social-psychological underpinnings of Place Attachment and considers the effect of multi-culturalism on the future of Equity Home Bias. The book's unique approach discusses the issues in conceptual terms, rather than using data and statistical methods. This book is both multi-disciplinary and inter-disciplinary, and therefore, it is an invaluable resource for graduate students and researchers who are interested in economics, finance, philosophy, and/or methodology, introducing them to a new line of research.

Author : Adam Hantak
Publisher : diplom.de
Page : 72 pages
File Size : 42,7 Mb
Release : 2011-10-20
Category : Business & Economics
ISBN : 9783842821538

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Equity Home Bias by Adam Hantak Pdf

Inhaltsangabe:Introduction: Every investor faces the challenge of making the right investment decisions. Upon analysing the allocation of wealth among countries, it becomes evident that investors do not invest their financial wealth internationally, but tend to invest the majority of their wealth in domestic equity. Financial theory deems this behaviour irrational, since holding a domestic portfolio is considered to be suboptimal due to the foregone benefits of international diversification. Assuming that the financial theory is right in this prediction, the question as to what are the causes for this irrational behaviour comes to mind and forms the focal point of this work. One the one hand, investors may be well aware of the costs connected with holding a domestic portfolio. Market restrictions, however, do not allow investors to attain the optimal international portfolio. On the other hand, investors may be unaware of the benefits of international diversification, and instead have a preference for domestic equity and fail to perceive the domestic portfolio as suboptimal. The traditional financial theory for this behaviour provides the institutional explanations with the focus on market imperfections and the behavioural financial theory provides explanations with the focus on investor irrationality. Following this classification of both theories, this work briefly reviews institutional explanations, as many of them lack empirical evidence and concentrates mainly on the behavioural explanations, as they are the focal point of current research and find wide empirical support. After defining equity home bias and related concepts in Chapter 2, the costs of equity home bias are discussed in Chapter 3. In Chapter 4, institutional explanations are considered. Section 4.1 reviews briefly a number of older institutional explanations, such as direct investment barriers, transactions costs and taxes, as they do not find much empirical support. Section 4.2 explores in more detail an explanation based on information asymmetry, as it may at least partially contribute to the solution of the home bias problem. With the emergence and acceptance of behavioural finance new explanations based on irrationality of investors were advanced and are presented in Chapter 5. Section 5.1 explores optimistic expectations about domestic markets as one of the early behavioural explanations. Section 5.2 deals with the competence hypothesis and creates a foundation for the [...]

Author : Thorsten Hens,Marc Oliver Rieger,Mei Wang
Publisher : World Scientific
Page : 573 pages
File Size : 45,7 Mb
Release : 2020-10-29
Category : Business & Economics
ISBN : 9789811221965

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Cultural Finance: A World Map Of Risk, Time And Money by Thorsten Hens,Marc Oliver Rieger,Mei Wang Pdf

This book provides a comprehensive overview of the emerging field of cultural finance. It summarizes research results of cultural differences in financial decision making and financial markets. Many of the results have been published in leading academic journals over the last ten years but some are presented here for the first time. The book is based on an international survey on risk and time preferences — the INTRA study, conducted in 53 countries worldwide. Applications to financial markets include the equity premium puzzle, the value premium, dividend payout policies and asset allocations.

Author : Martin Feldstein
Publisher : University of Chicago Press
Page : 500 pages
File Size : 43,8 Mb
Release : 2007-12-01
Category : Business & Economics
ISBN : 9780226241807

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International Capital Flows by Martin Feldstein Pdf

Recent changes in technology, along with the opening up of many regions previously closed to investment, have led to explosive growth in the international movement of capital. Flows from foreign direct investment and debt and equity financing can bring countries substantial gains by augmenting local savings and by improving technology and incentives. Investing companies acquire market access, lower cost inputs, and opportunities for profitable introductions of production methods in the countries where they invest. But, as was underscored recently by the economic and financial crises in several Asian countries, capital flows can also bring risks. Although there is no simple explanation of the currency crisis in Asia, it is clear that fixed exchange rates and chronic deficits increased the likelihood of a breakdown. Similarly, during the 1970s, the United States and other industrial countries loaned OPEC surpluses to borrowers in Latin America. But when the U.S. Federal Reserve raised interest rates to control soaring inflation, the result was a widespread debt moratorium in Latin America as many countries throughout the region struggled to pay the high interest on their foreign loans. International Capital Flows contains recent work by eminent scholars and practitioners on the experience of capital flows to Latin America, Asia, and eastern Europe. These papers discuss the role of banks, equity markets, and foreign direct investment in international capital flows, and the risks that investors and others face with these transactions. By focusing on capital flows' productivity and determinants, and the policy issues they raise, this collection is a valuable resource for economists, policymakers, and financial market participants.

Author : Reena Aggarwal,Leora Klapper
Publisher : World Bank Publications
Page : 47 pages
File Size : 44,8 Mb
Release : 2003
Category : Foreign exchange
ISBN : 8210379456XXX

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Portfolio Preferences of Foreign Institutional Investors by Reena Aggarwal,Leora Klapper Pdf

Author : Kavous Ardalan
Publisher : Routledge
Page : 230 pages
File Size : 41,6 Mb
Release : 2019-05-17
Category : Business & Economics
ISBN : 9781000001433

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Equity Home Bias in International Finance by Kavous Ardalan Pdf

This book provides a comprehensive and critical analysis of research outcomes on the equity home bias puzzle – that people overinvest in domestic stocks relative to the theoretically optimal investment portfolio. It introduces place attachment – the bonding that occurs between individuals and their meaningful environments – as a new explanation for equity home bias, and presents a philosophically multi-paradigmatic view of place attachment. For the first time, a comprehensive and up-to-date review of the extant literature is provided, demonstrating that place attachment is a contributing factor to 22 different topics in which variations of home bias are present. The author also analyses the social-psychological underpinnings of place attachment, and considers the effect of multi-culturalism on the future of equity home bias. The book’s unique approach discusses the issues in conceptual terms rather than through data and statistical methods. This multi- and inter-disciplinary book is an invaluable resource for graduate students and researchers interested in economics, finance, philosophy, and/or methodology, introducing them to a new line of research.

Author : Fang Cai
Publisher : Unknown
Page : 48 pages
File Size : 45,7 Mb
Release : 2016
Category : Electronic
ISBN : OCLC:1306165686

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International Diversification at Home and Abroad by Fang Cai Pdf

We analyze foreigners' and domestic institutional investors' positions in U.S. equities. Controlling for many factors, we uncover a common preference for large firms and firms that are diversified internationally. The domestic preference for internationally diversified firms implies that investors might obtain substantial international diversification by investing at home. Using an international factor model, we show that exposure to foreign equity markets is indeed greater for domestic firms that are more diversified internationally, suggesting that at least some of the home-grown foreign.

Author : Ms.Hali J. Edison,Mr.Francis E. Warnock
Publisher : International Monetary Fund
Page : 33 pages
File Size : 47,6 Mb
Release : 2003-12-01
Category : Business & Economics
ISBN : 9781451875768

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U.S. Investors' Emerging Market Equity Portfolios by Ms.Hali J. Edison,Mr.Francis E. Warnock Pdf

We analyze a unique data set and uncover a remarkable result that casts a new light on the home bias phenomenon. The data are comprehensive, security-level holdings of emerging market equities by U.S. investors. We document, as expected, that at a point in time U.S. portfolios are tilted towards firms that are large, have fewer restrictions on foreign ownership, or are cross-listed on a U.S. exchange. The size of the cross-listing effect is striking. In contrast to the well-documented underweighting of foreign stocks, emerging market equities that are cross-listed on a U.S. exchange are incorporated into U.S. portfolios at full international capital asset pricing model (CAPM) weights. Our results suggest that information asymmetries play an important role in equity home bias and that the benefits of international risk sharing are limited to select firms.

Author : Jeffrey A. Frankel
Publisher : University of Chicago Press
Page : 428 pages
File Size : 51,7 Mb
Release : 2008-04-15
Category : Business & Economics
ISBN : 9780226260211

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The Internationalization of Equity Markets by Jeffrey A. Frankel Pdf

This timely volume addresses three important recent trends in the internationalization of United States equity markets: extensive market integration through foreign investment and links among stock prices around the world; increasing securitization as countries such as Japan come to rely more than ever before on markets in equities and bonds at the expense of banks; and the opening of national financial systems of newly industrializing countries to international financial flows and institutions, as governments remove capital controls and other barriers. Eight essays examine such issues as the current extent of international market integration, gains to U.S. investors through international diversification, home-country bias in investing, the role of time and location around the world in stock trading, and the behavior of country funds. Other, long-standing questions about equity markets are also addressed, including market efficiency and the accuracy of models of expected returns, with a particular focus on variances, covariances, and the price of risk according to the Capital Asset Pricing Model.

Author : International Monetary Fund
Publisher : International Monetary Fund
Page : 180 pages
File Size : 45,7 Mb
Release : 1997-01-01
Category : Business & Economics
ISBN : 9781455216567

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Coordinated Portfolio investment Survey by International Monetary Fund Pdf

This paper presents a coordinated portfolio investment survey guide provided to assist national compilers in the conduct of the Coordinated Portfolio Investment Survey, conducted under the auspices of the IMF with reference to the year-end 1997. The guide covers a variety of conceptual issues that a country must address when conducting a survey. It also covers the practical issues associated with preparing for a national survey. These include setting a timetable, taking account of the legal and confidentiality issues raised, developing a mailing list, and maintaining quality control checks.