The Liability of Foreignness in International Equity Investments: Evidence from the U.S. Stock Market

• Main Authors: BAIK, Bok, KANG, Jun-Koo, KIM, Jin-Mo, LEE, Joonho
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2013
• Subjects: foreign institutional ownership; domestic institutional ownership; liability of foreignness; return predictability; information asymmetry; Accounting; Corporate Finance
• Online Access: https://ink.library.smu.edu.sg/soa_research/1110; https://ink.library.smu.edu.sg/context/soa_research/article/2109/viewcontent/2013_JIBS_foreign_20institutions.pdf
• Institution: Singapore Management University

Using foreign institutional ownership data in the US from 1990 to 2007, we examine whether foreign institutional investors face liabilities of foreignness (LOF) in the US stock market. We find that foreign institutional investors prefer low information asymmetry stocks more than domestic institution...