The Determinants of International Equity Holdings: Information vs. Culture

Erkin Diyarbakirlioglu
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Erkin Diyarbakirlioglu: IRG - Institut de Recherche en Gestion - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12 - Université Gustave Eiffel

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Abstract: I examine whether the effect of physical distance on the geography of international portfolio investments undergoes an informational or a cultural channel. Using two measures to disentangle the effects of the physical distance, namely the cultural distance proposed by Kogut and Singh (1988), and a new measure of the information distance, I analyze a panel dataset showing 24 source countries' bilateral equity holdings in various destinations as of the end-2006. Regressions suggest that the effect of the geography on international portfolio investments is likely to be a phenomenon linked to information asymmetries rather than one reflecting the impact of the cultural proximity between countries.

Keywords: information distance; cultural distance; gravity model; home bias (search for similar items in EconPapers)
Date: 2011-05-11
Note: View the original document on HAL open archive server: https://hal.science/hal-03642469v1
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Citations: View citations in EconPapers (2)

Published in 28th AFFI Conference, May 2011, Montpellier, France

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