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The Impact of Foreign Investors on the Stock Price of Korean Enterprises during the Global Financial Crisis

Yoonmin Kim () and Gab-Je Jo ()
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Yoonmin Kim: Department of Economics and Finance, Keimyung University, Daegu 42601, Korea
Gab-Je Jo: Department of Economics and Finance, Keimyung University, Daegu 42601, Korea

Sustainability, 2019, vol. 11, issue 6, 1-13

Abstract: This paper investigates the impact and behavior of foreign equity investment on the price of the nine largest KOSPI (Korea Composite Stock Price Index) enterprises and Samsung Electronics preference stocks in terms of market capitalization during the global financial crisis (2 January 2007 to 30 December 2008). The empirical results indicate that foreign investors show strong, positive feedback trading behavior with regard to the stock price of Samsung Electronics, which is the largest KOSPI enterprise in terms of market capitalization. We also found evidence that the behavior of foreign investors significantly increased volatility in the stock returns of the two largest Korean conglomerates (Samsung Electronics and Hyundai Motors), which account for approximately 25 percent of total KOSPI market capitalization.

Keywords: foreign investor groups; individual investor groups; institutional investor groups; volatility; capital market openness; information asymmetry; sustainable capital market; emerging markets (search for similar items in EconPapers)
JEL-codes: Q Q0 Q2 Q3 Q5 Q56 O13 (search for similar items in EconPapers)
Date: 2019
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