Does corporate governance risk at home affect investment choices abroad?

• 成果类型: Article
• 署名作者: Kim, Woochan; Sung, Taeyoon; Wei, Shang-Jin
• 署名单位: Columbia University; KDI School of Public Policy & Management; Yonsei University; National Bureau of Economic Research
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2011.03.009
• 发表日期: 2011
• 页码: 25-41
• 关键词: CORPORATE GOVERNANCE; Foreign portfolio investment; Asian financial crisis

摘要

Disparity between control and ownership rights gives rise to the risk of tunneling by the controlling shareholder, and is prevalent in many emerging market economies and present in some developed countries. At the same time, international investors come from different countries whose home markets are characterized by varying degrees of control-ownership disparity. This paper studies whether this difference in investors' home countries affects their portfolio choice in an emerging market. It combines two unique data sets on ownership and control in business groups, and investor-stock level foreign investment in Korea. A key finding is that investors from low-disparity countries disfavor high-disparity stocks in Korea, but investors from high-disparity countries are indifferent. Moreover, investors from low-disparity countries became averse to disparity only after the Asian financial crisis. These results suggest that the nature of corporate governance in international investors' home countries affects their portfolio choice abroad, and therefore these investors should not be lumped together in the analyses of their portfolio choice. (C) 2011 Elsevier B.V. All rights reserved.