 Foreigners at the gate? Foreign investor trading and the disposition effect of domestic individual investorsKeun Woo Park, Seong Hoon Jeong and Ji Yeol Jimmy Oh The North American Journal of Economics and Finance, 2019, vol. 49, issue C, 165-180 Abstract: Using the account-level data of a major Korean securities firm between 1999 and 2005, we examine whether the strength of domestic individual traders’ disposition effect is affected by the inflow of foreign investors. Our sample period, beginning just after the liberalization that lifted the cap on foreign investor ownership, allows for an interesting insight into how domestic individuals perceive foreign investors’ entry into an emerging stock market. We find that individual investors are more likely to realize paper gains on stocks with large recent foreign investor purchase, which appears to be behaviorally motivated. These individual investors are also less likely to trade stocks with large foreign ownership in the first place, further hinting at their aversion. Our main results are robust to a difference-in-difference analysis based on the inclusion of a stock into the MSCI Korea index. Keywords: Disposition effect; Papers gains realized; Trading behavior; Emerging market; Investor sentiment (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecofin:v:49:y:2019:i:c:p:165-180 DOI: 10.1016/j.najef.2019.04.009 Access Statistics for this article The North American Journal of Economics and Finance is currently edited by Hamid Beladi More articles in The North American Journal of Economics and Finance from Elsevier |
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