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Access to information and international portfolio allocation

Chandra Thapa, Krishna Paudyal () and Suman Neupane ()

Journal of Banking & Finance, 2013, vol. 37, issue 7, 2255-2267

Abstract: We examine whether foreign equity holdings of portfolio investors depend on the level of information accessibility between the investors’ home and host countries. Using a comprehensive data set, alternative measures of information accessibility and robust analytical techniques, we show that differences in access to cross-country information significantly influence investors’ portfolio allocation decisions. Furthermore, the results suggest that for a given level of access to information, investors prefer to invest more in countries with a higher quality of legal/macro-institutions. Finally, the findings also confirm that the implications of information accessibility are more pronounced when markets are turbulent.

Keywords: Access to information; International equity portfolio; Panel data models; Legal/macro-institutions; Turbulent market condition (search for similar items in EconPapers)
JEL-codes: G11 G14 (search for similar items in EconPapers)
Date: 2013
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DOI: 10.1016/j.jbankfin.2013.01.011

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