Transparency and International Investor Behavior
39 Pages Posted: 3 Feb 2006
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Transparency and International Investor Behavior
Transparency and International Investor Behavior
Transparency and International Investor Behavior
Date Written: October 2002
Abstract
Does country "transparency" affect international portfolio investment? We examine this and related questions using a unique micro dataset on international portfolio holdings. We employ various indices of government and corporate transparency, focusing on the availability and quality of information. We find that emerging market equity funds hold fewer assets in less transparent countries. Herding among funds is somewhat less prevalent in more transparent countries. During the Asian and Russian crises, emerging market funds withdrew more strongly from less transparent countries after controlling for other risk factors. However, funds tend to react less strongly to news from more opaque markets.
Keywords: financial crises transparency portfolio investment emerging markets international investors international financial architecture contagion
JEL Classification: F30 D80 G10 G30
Suggested Citation: Suggested Citation