A cultural explanation of the foreign bias in international asset allocation

Journal of Banking and Finance

Volumn 34, Issue 9, 2010, Pages 2121-2131

  Beugelsdijk, Sjoerd ^a   Frijns, Bart ^b  

^a UNIVERSITY OF GRONINGEN   (Netherlands)

^b AUCKLAND UNIVERSITY OF TECHNOLOGY   (New Zealand)

Author keywords

Culture; Foreign bias; Home bias; International asset allocation

Indexed keywords

EID: 77954142174     PISSN: 03784266     EISSN: None     Source Type: Journal    
DOI: 10.1016/j.jbankfin.2010.01.020     Document Type: Article

References (41)

1. Aggarwal R., Goodell J. Markets and institutions in financial intermediation: National characteristics as determinants. Journal of Banking and Finance 2009, 33:1770-1780.
2. Aggarwal R., Klapper L., Wysocki P. Portfolio preferences of foreign institutional investors. Journal of Banking and Finance 2005, 29:2919-2946.
3. Berkel, B., 2007. Institutional determinants of international equity portfolios, a country level analysis. The B.E. Journal of Macroeconomics (7.1 Article 34).
4. Bohn H., Tesar L. U.S. equity investment in foreign markets: Portfolio rebalancing or return chasing. American Economic Review 1996, 86:77-81.
5. Chan K., Covrig V., Ng L. What determines the domestic bias and foreign bias? Evidence from mutual fund equity allocations worldwide. Journal of Finance 2005, 60:1495-1534.
6. Chen L.-W., Johnson S., Lin J.-C., Liu Y.-J. Information, sophistication, and foreign versus domestic investors' performance. Journal of Banking and Finance 2009, 33:1636-1651.
7. Chui A., Kwok C. National culture and life insurance consumption. Journal of International Business Studies 2008, 39:88-101.
8. Chui A., Titman S., Wei J. Individualism and momentum around the world. Journal of Finance 2010, 65:361-392.
9. Coval J., Moskowitz T. Home bias at home: Local equity preference in domestic portfolios. Journal of Finance 1999, 54:2045-2073.
10. Dahlquist M., Pinkowitz L., Stulz R., Williamson R. Corporate governance and the home bias. Journal of Financial and Quantitative Analysis 2003, 38:87-110.
11. Djankov S., La Porta R., Lopez-de-Silanes F., Shleifer A. The law and economics of self-dealing. Journal of Financial Economics 2008, 88:430-465.
12. Dohmen, T., Falk, A., Huffman, D., Sunde, U., 2006. The Intergenerational Transmission of Risk and Risk Attitudes. Working Paper, Institute for the Study of Labor, Bonn.
13. Domowitz I., Glen J., Madhavan A. Liquidity, volatility, and equity trading costs across countries and over time. International Finance 2001, 4:221-255.
14. Dorn D., Huberman G. Talk and action: What individual investors say and what they do. Review of Finance 2005, 9:437-481.
15. Grinblatt M., Keloharju M. The investment behavior and performance of various investor types: A study of Finland's unique data set. Journal of Financial Economics 2000, 55:43-67.
16. Grinblatt M., Keloharju M. How distance, language, and culture influence stockholdings and trades. Journal of Finance 2001, 56:1053-1073.
17. Heckman J. Sample selection bias as a specification error. Econometrica 1979, 47:153-161.
18. Hofstede G. Culture's Consequences: International Differences in Work-Related Values 2001, Sage Publications, Beverly Hills, CA. 2nd ed.
19. Huberman G. Familiarity breeds investment. Review of Financial Studies 2001, 14:659-680.
20. Ivkovic Z., Weisbenner S. Local does as local is: Information content of the geography of individual investors common stock investments. Journal of Finance 2005, 60:267-306.
21. Kalev P., Nguyen A., Oh N. Foreign versus local investors: Who knows more? Who makes more. Journal of Banking and Finance 2008, 32:2376-2389.
22. Kang J., Stulz R. Why is there a home bias? An analysis of foreign portfolio equity ownership in Japan. Journal of Financial Economics 1997, 46:3-28.
23. Kang, H., Lee, D., Park, K., forthcoming. Does the difference in valuation between domestic and foreign investors help explain their distinct holdings of domestic stocks. Journal of Banking and Finance.
24. Karlsson A., Norden L. Home sweet home Home bias and international diversification among individual investors. Journal of Banking and Finance 2007, 31:317-333.
25. Ke, D., Ng, L., Wang, Q., forthcoming. Home bias in foreign investment decisions. Journal of International Business Studies.
26. Kerr N., MacCoun R., Kramer G. Bias in judgment: Comparing individuals and groups. Psychological Review 1996, 103:687-719.
27. Kilka M., Weber M. Home bias in international stock return expectation. Journal of Psychology and Financial Markets 2000, 1:176-192.
28. Kirkman B., Lowe K., Gibson C. A quarter century of Culture's consequences: A review of empirical research incorporating Hofstede's cultural values framework. Journal of International Business Studies 2006, 37:285-320.
29. Kogut B., Singh H. The effect of national culture on the choice of entry mode. Journal of International Business Studies 1988, 19:411-432.
30. Kwok C., Reeb D. Internationalization and firm risk: An upstream-downstream hypothesis. Journal of International Business Studies 2000, 31:611-629.
31. Kwok C., Tadesse S. National culture and financial systems. Journal of International Business Studies 2006, 37:227-247.
32. La Porta R., Lopez-de-Silanes F., Shleifer A., Vishny R. Law and finance. Journal of Political Economy 1998, 106:1113-1155.
33. Magnussen, P., Wilson, R.T., Zdravokovic, R., Zhou, J.X., Westjohn, S., 2008. Breaking the cultural clutter: A comparative assessment of multiple cultural and institutional frameworks. International Marketing Review 25.2, 183-201.
34. Morse, A., Shiva, S., forthcoming. Patriotism in your portfolio. Journal of Financial Markets.
35. Shenkar O. Cultural distance revisited: Towards a more rigorous conceptualization and measurement of cultural differences. Journal of International Business Studies 2001, 32:519-535.
36. Shupp R., Williams A. Risk preference differentials of small groups and individuals. Economic Journal 2008, 118:258-283.
37. Spector P., Cooper C., Sparks K. Do national levels of individualism and internal locus of control relate to well-being: An ecological level international study. Journal of Organizational Behavior 2001, 22:815-832.
38. Stulz R., Williamson R. Culture, openness and finance. Journal of Financial Economics 2003, 70:313-349.
39. Tabellini G. The scope of cooperation: Values and incentives. Quarterly Journal of Economics 2008, 123:905-950.
40. Tang L., Koveos P. A framework to update Hofstede's value indices: Economic dynamics and institutional stability. Journal of International Business Studies 2008, 39:1045-1063.
41. Van den Steen E. Rational overoptimism (and other biases). American Economic Review 2004, 94:1141-1151.