Financial Globalization, Governance, and the Evolution of the Home Bias

• 成果类型: Article
• 署名作者: Kho, Bong-Chan; Stulz, Rene M.; Warnock, Francis E.
• 署名单位: Seoul National University (SNU); University System of Ohio; Ohio State University; University of Virginia; National Bureau of Economic Research
• 刊物名称: JOURNAL OF ACCOUNTING RESEARCH
• ISSN/ISSBN: 0021-8456
• DOI: 10.1111/j.1475-679X.2009.00323.x
• 发表日期: 2009
• 页码: 597-635
• 关键词: CORPORATE GOVERNANCE; Investor protection; large shareholders; equity portfolios; OWNERSHIP; firm; LIBERALIZATION; returns; WORLD; COSTS

摘要

We merge portfolio theories of home bias with corporate finance theories of insider ownership to create the optimal corporate ownership theory of the home bias. The theory has two components: (1) foreign portfolio investors exhibit a large home bias against countries with poor governance because their investment is limited by high optimal ownership by insiders (the direct effect of poor governance) and domestic monitoring shareholders (the indirect effect) in response to the governance and (2) foreign direct investors from good governance countries have a comparative advantage as insider monitors in poor governance countries, so that the relative importance of foreign direct investment is negatively related to the quality of governance. Using both country-level data on U.S. investors' foreign investment allocations and Korean firm-level data, we find empirical evidence supporting our optimal corporate ownership theory of the home bias.