Investment restrictions and the cross-border flow of information: Some empirical evidence

Bailey, Warren; Mao, Connie X.; Sirodom, Kulpatra

doi:10.1016/j.jimonfin.2006.10.004

Cited by 62 publications

(5 citation statements)

References 59 publications

(57 reference statements)

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“…Foreign investors might also have stronger investment skills, especially institutional investors from developed countries who are investing in developing countries. Some papers comparing the performance of domestic and foreign investors document a stronger performance of foreign investors (Grinblatt and Keloharju (2000); Seasholes (2000); Huang and Shiu (2005); Bailey et al (2007); Froot and Ramadorai (2008)). Second, Desai et al (2006) show that countries with stricter capital controls also have higher borrowing costs than countries with less strict capital controls.…”

Section: Possible Mechanismsmentioning

confidence: 99%

The cross‐predictability of industry returns in international financial markets

Wang,

Zhang

2023

Int Rev Finance

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This article finds evidence of return cross‐predictability among trading partners in international financial markets. We show that the predictability of international customers dominates the predictability of domestic customers, and the predictability of international intra‐industry customers dominates the predictability of international inter‐industry customers. This return cross‐predictability decreases with two country characteristics: financial sophistication and size.

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Section: Possible Mechanismsmentioning

confidence: 99%

The cross‐predictability of industry returns in international financial markets

Wang,

Zhang

2023

Int Rev Finance

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“…Other studies have also shown that foreign institutional investors have information advantages (Choe et al., 2005; Froot et al., 2001; Froot & Ramadorai, 2008; Huang & Shiu, 2009). Further, foreign investors have greater expertise in processing information (Bailey et al., 2007) and have better access to abundant resources (Bae et al., 2012). Their history of investment in other markets and their successful performance (Grinblatt & Keloharju, 2000) give them informational advantages over domestic institutional investors.…”

Section: Related Literature and Hypothesis Developmentmentioning

confidence: 99%

Does geographic or market proximity matter? Evidence from institutional investor monitoring on earnings attributes in US cross‐listed stocks

Kang,

Chung,

Fard

2023

Bulletin of Econ Res

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This study investigates institutional distance as a factor of investors’ monitoring of corporate earnings attributes. We analyze the US cross‐listing market to determine whether institutional monitoring depends on geographic or market proximity. We find that shareholdings of non‐US institutions headquartered in the same country as the investee firm are significantly and positively related to earnings quality. However, we do not find such a monitoring role in the United States, or in institutions not incorporated in the investee firm's home country. Our findings support a geographic proximity advantage over market proximity, which is more pronounced when firms’ information opacity is more severe; the results are not altered by the choice of earnings attribute variables.

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“…The connection program will also induce more mature and experienced market participants, who have superior resources and capabilities to collect, process, and utilise value‐relevant firm‐specific information. Previous studies have found that foreign investors are expected to have information advantages over domestic investors in emerging markets because of their experience and expertise (e.g., Bae et al, 2006; Bailey et al, 2007; Dvořák, 2005). Given that the Chinese stock market is dominated by individual investors, northbound investors are sufficiently sophisticated to uncover firm fundamentals, which increase stock price informativeness and reduce information asymmetry of connected firms (Chen et al, 2020; Sohn & Jiang, 2016).…”

Section: Literature Review and Hypotheses Developmentmentioning

confidence: 99%

Stock market liberalisation and acquisition outcomes: Evidence from a natural experiment

Lin

Hou

2023

Int. J Fin Econ

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Taking the Shanghai/Shenzhen‐Hong Kong stock connect policy as a natural experiment, we use a difference‐in‐differences approach to investigate how stock market liberalisation affects M&A outcomes. Employing a sample of Chinese listed firms from 2011 to 2020, we find that the stock market liberalisation leads to more positive M&A announcement returns. The positive effect on M&A announcement returns is the result of increased investor sentiment after market liberalisation. It is the investor sentiment mechanism through which stock market liberalisation has effects on M&A short‐term returns. Further analysis indicates that stock market liberalisation does not impose positive effects on long‐term M&A outcomes. We do not find evidence that M&As initiated by connected firms to be more value‐added.

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Investment restrictions and the cross-border flow of information: Some empirical evidence

Cited by 62 publications

References 59 publications

The cross‐predictability of industry returns in international financial markets

The cross‐predictability of industry returns in international financial markets

Does geographic or market proximity matter? Evidence from institutional investor monitoring on earnings attributes in US cross‐listed stocks

Stock market liberalisation and acquisition outcomes: Evidence from a natural experiment

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