Do foreign investors exhibit a corporate governance disadvantage An information asymmetry perspective

Journal of International Business Studies

Volumn 41, Issue 8, 2010, Pages 1415-1438

  Kang, Jun Koo ^a   Kim, Jin Mo ^b  

^a NANYANG TECHNOLOGICAL UNIVERSITY   (Singapore)

^b RUTGERS BUSINESS SCHOOL   (United States)

Author keywords

announcement return; cross border mergers and acquisitions (M As); foreign acquirer; governance activity; information asymmetry

Indexed keywords

EID: 77958000689     PISSN: 00472506     EISSN: 14786990     Source Type: Journal    
DOI: 10.1057/jibs.2010.18     Document Type: Article

References (45)

1. Allen, J., & Phillips, G. 2000. Corporate equity ownership, strategic alliances, and product market relationships. Journal of Finance, 55(6):2791-2815.
2. Bae, K., Stulz, R., & Tan, H. 2008. Do local analysts know more? A cross-country study of the performance of local analysts and foreign analysts. Journal of Financial Economics, 88(3):581-606.
3. Baik, B., Kang, J., & Kim, J. 2010. Local institutional investors, information asymmetries, and equity returns. Journal of Financial Economics, 97(1):81-106.
4. Bethel, J., Liebeskind, J., & Opler, T. 1998. Block purchases and corporate performance. Journal of Finance, 53(2):605-634.
5. Butz, D. 1994. How do large minority shareholders wield control? Managerial and Decision Economics, 15(4):291-298.
6. Chan, K., Covrig, V., & Ng, L. 2005. What determines the domestic bias and foreign bias? Evidence from mutual fund equity allocations worldwide. Journal of Finance, 60(3):1495-1534.
7. Choe, H., Kho, B., & Stulz, R. 2005. Do domestic investors have an edge? The trading experience of foreign investors in Korea. Review of Financial Studies, 18(3):795-829.
8. Coval, J., & Moskowitz, T. 1999. Home bias at home: Local equity preference in domestic portfolios. Journal of Finance, 54(6):2045-2073.
9. Covrig, V., Lau, S., & Ng, L. 2006. Do domestic and foreign fund managers have similar preferences for stock characteristics? A cross-country analysis. Journal of International Business Studies, 37(3):407-429.
10. Demsetz, H., & Lehn, K. 1985. The structure of corporate ownership: Causes and consequences. Journal of Political Economy, 93(6):1155-1177.
11. Dyck, A., & Zingales, L. 2004. Private benefits of control: An international comparison. Journal of Finance, 59(2):537-600.
12. Fama, E., & French, K. 1997. Industry cost of equity. Journal of Financial Economics, 43(2):153-193.
13. Fee, E., Hadlock, C., & Thomas, S. 2006. Corporate equity ownership and the governance of product market relationships. Journal of Finance, 61(3):1217-1251.
14. Forbes, K. 2008. Why do foreigners invest in the United States?, NBER working paper No. 13908, National Bureau of Economic Research, Cambridge, MA.
15. Grinblatt, M., & Keloharju, M. 2001. How distance, language and culture influence stockholdings and trades. Journal of Finance, 56(3):1053-1073. (Pubitemid 33581674)
16. Harris, R., & Ravenscraft, D. 1991. The role of acquisitions in foreign direct investment: Evidence from the US stock market. Journal of Finance, 46(3):825-844.
17. Hofstede, G. 1980. Culture's consequences: International differences in work-related values. Beverly Hills, CA: Sage Publications.
18. Ivkovich, Z., & Weisbenner, S. 2005. Local does as local is: Information content of the geography of individual investors' common stock investments. Journal of Finance, 60(1):267-306.
19. Jensen, M. 1986. Agency costs of free cash flow, corporate finance, and takeovers. American Economic Review, 76(2):323-329.
20. Jensen, M., & Meckling, W. 1976. Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4):305-360.
21. Jensen, M., & Ruback, R. 1983. The market for corporate control: The scientific evidence. Journal of Financial Economics, 11(1):5-50.
22. John, K., & Senbet, L. 1998. Corporate governance and board effectiveness. Journal of Banking and Finance, 22(4):371-403.
23. Kang, J. 1993. The international market for corporate control: Mergers and acquisitions of US firms by Japanese firms. Journal of Financial Economics, 34(3):345-371.
24. Kang, J., & Kim, J. 2008. The geography of block acquisitions. Journal of Finance, 63(6):2817-2858.
25. Kang, J., Kim, J., Liu, W., & Yi, S. 2006. Post-takeover restructuring and the sources of gains in foreign takeovers: Evidence from US targets. Journal of Business, 79(5):2503-2537.
26. Kho, B., Stulz, R., & Warnock, F. 2009. Financial globalization, governance, and the evolution of the home bias. Journal of Accounting Research, 47(2):597-635.
27. Kogut, B., & Singh, H. 1988. The effect of national culture on the choice of entry mode. Journal of International Business Studies, 19(3):411-432.
28. Krug, J., & Nigh, D. 1998. Top management departures in cross-border acquisitions: Governance issues in an international context. Journal of International Management, 4(4):267-287.
29. La Porta, R., Lopez-de-Silanes, F., Shleifer, A., & Vishny, R. 1997. Legal determinants of external finance. Journal of Finance, 52(3):1131-1150.
30. La Porta, R., Lopez-de-Silanes, F., Shleifer, A., & Vishny, R. 1998. Law and finance. Journal of Political Economy, 106(6):1113-1155.
31. Liao, C. 2008. Corporate block acquisitions around the world, Working paper, Rutgers University.
32. Lerner, J. 1995. Venture capitalists and the oversight of private firms. Journal of Finance, 50(1):301-318.
33. Leuz, C., Lins, K., & Warnock, F. 2009. Do foreigners invest less in poorly governed firms? Review of Financial Studies, 22(8):3245-3285.
34. Mikkelson, W., & Ruback, R. 1985. An empirical analysis of the interfirm equity investment process. Journal of Financial Economics, 14(4):523-553.
35. Morck, R., & Yeung, B. 1991. Why investors value multinationality. Journal of Business, 64(2):165-187.
36. Morck, R., & Yeung, B. 1992. Internalization: An event study test. Journal of International Economics, 33(1):41-56.
37. Orpurt, S. 2004. Domestic analyst earnings forecast advantages in Europe, Working paper, The University of Chicago.
38. Petersen, M., & Rajan, R. 2002. Does distance still matter? The information revolution in small business lending. Journal of Finance, 57(6):2533-2570.
39. Roth, K., & O'Donnell, S. 1996. Foreign subsidiary compensation strategy: An agency theory perspective. Academy of Management Journal, 39(3):678-703.
40. Seth, A., Song, K., & Pettit, R. 2000. Synergy, managerialism or hubris? An empirical examination of motives for foreignacquisitions of US firms. Journal of International Business Studies, 31(3):387-405.
41. Shleifer, A., & Vishny, R. 1986. Large shareholders and corporate control. Journal of Political Economy, 94(3):461-488.
42. Stulz, R., & Williamson, R. 2003. Culture, openness, and finance. Journal of Financial Economics, 70(3):313-349.
43. Sussman, O., & Zeira, J. 1995. Banking and development, CEPR Discussion Paper No. 1127, Centre for Economic Policy Research, London.
44. Van de Ven, W. P. M. M., & Van Praag, B. M. S. 1981. The demand for deductibles in private health insurance: A probit model with sample selection. Journal of Econometrics, 17(2):229-252.
45. Zwiebel, J. 1995. Block investment and partial benefits of corporate control. Review of Economic Studies, 62(2):161-185.