Bias in foreign equity portfolios: households versus professional investors

Giofré, Maela M. (2008): Bias in foreign equity portfolios: households versus professional investors.

Abstract

Non professional investors display a much higher degree of home bias than fiancial investors suggesting that they might be more severely a¤ected by information asymmetry issues. In particular, non professional investors, having less easily access to information on foreign firm-specific characteristics than institutional investors, will rely more heavily on country-specific factors. We test this conjecture restricting the analysis to foreign equity portfolios of four European investing countries -France, Italy, Spain and Sweden. We find, indeed, that households� portfolios are more strongly in�uenced by proximity variables, transparency of the destination stock market and, even more interestingly, by common-listing in the Euronext platform.

• Item Type: MPRA Paper
• Language: English
• Keywords: portfolio choice; international diversification; information asymmetries; cross-listing; household finance
• Subjects: G - Financial Economics > G1 - General Financial Markets > G11 - Portfolio Choice ; Investment Decisions; F - International Economics > F3 - International Finance > F30 - General; G - Financial Economics > G1 - General Financial Markets > G15 - International Financial Markets

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