 Comparative corporate governance and international portfoliosThe European Journal of Finance, 2016, vol. 22, issue 8-9, 756-781 Abstract: The impact of foreign investor protection on portfolio choices negatively depends on the degree of domestic investor protection enjoyed by the investor. The coefficient of foreign countries’ investor protection scaled by world average is therefore not constant across investing countries. The ratio foreign to domestic investor protection rights index is shown instead to be a plausible common driver of international portfolios. Phrased differently, domestic investor protection replaces the world average corporate governance in the construction of the relevant measure driving international portfolio choice. If the weight attached to the domestic factor in the construction of the average measure is large enough it can determine, almost completely, the world average corporate governance. This outcome is consistent with a setting in which the investor, strongly hit by information constraints, places a disproportionally large weight on domestic information considered as more reliable because observed at a higher precision. Date: 2016 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:taf:eurjfi:v:22:y:2016:i:8-9:p:756-781 Ordering information: This journal article can be ordered from DOI: 10.1080/1351847X.2014.902857 Access Statistics for this article The European Journal of Finance is currently edited by Chris Adcock More articles in The European Journal of Finance from Taylor & Francis Journals |
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