Performance and informed trading. Comparing foreigners, institutions and individuals in an emerging stock market

Diego Agudelo (), James Byder and Paula Yepes-Henao

Journal of International Money and Finance, 2019, vol. 90, issue C, 187-203

Abstract: Do local institutions, local individuals or foreigners perform better in a small emerging market? We seek answers to this question by examining the investment performance of each group of investors using two unique databases of Colombian stocks. Our analysis serves as an out-of-sample test of previous findings. We find that local institutions have better outcomes than foreigners and local individuals on all performance measures. Furthermore, local individuals perform better than foreigners on trading execution, while foreigners generate better long-term returns. Using a bid-ask spread decomposition, we provide additional evidence that the better performance of institutions is consistent with informational advantages. Our findings reconcile contradictory statements from previous studies.

Keywords: Foreign investors; Individual investors; Institutional investors; Informed trading; Performance; Bid-ask spread decomposition (search for similar items in EconPapers)
JEL-codes: D82 G14 G15 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jimfin:v:90:y:2019:i:c:p:187-203

DOI: 10.1016/j.jimonfin.2018.09.001

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