Language:
English
Pages:
Online-Ressource (59 p)
Edition:
Reproduktion 2011 World Bank eLibrary
Parallel Title:
Didier, Tatiana Information asymmetries and institutional investor mandates
Abstract:
The preference among foreign institutional investors for large firms is widely documented. This paper deepens our understanding of international investments by providing evidence that foreign institutional investors with broader investment scopes prefer to invest in firms where they are less prone to information disadvantages than more specialized ones. In other words, there is heterogeneity in how information asymmetries affect investors' portfolio choices. Theoretically, a model with costly information and short-selling constraints shows that the broader the investor's mandate, the smaller the incentives to gather and process costly information. Empirically, an analysis of the mutual fund industry in the United States supports this hypothesis
DOI:
10.1596/1813-9450-5586
URL:
Volltext
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