Bias in foreign equity portfolios: households versus professional investors

MPRA Paper from University Library of Munich, Germany

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.

Keywords: portfolio choice; international diversification; information asymmetries; cross-listing; household finance (search for similar items in EconPapers)
JEL-codes: F30 G11 G15 (search for similar items in EconPapers)
Date: 2008
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:13929

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