Seeing is Believing: Tourism and Foreign Equity Investments

59 Pages Posted: 13 Nov 2018 Last revised: 6 Feb 2024

See all articles by Constantinos Antoniou

Constantinos Antoniou

University of Warwick - Warwick Business School

Carina Cuculiza

Oklahoma State University - Stillwater - Spears School of Business

Alok Kumar

University of Miami - Miami Herbert Business School

Lizhengbo Yang

Capital University of Economics and Business

Date Written: February 2, 2024

Abstract

This study examines whether international tourism affects financial market investments. We find that recreational travel between countries is associated with higher levels of foreign equity investments. This increase in foreign equity investments reduces home bias for both U.S. households and institutional investors. Further, the effect of travel on foreign investments is unlikely to be induced by superior information. Using scenery-related predictors of recreational travel as instruments and exploiting exogenous shocks to travel, we establish a causal relation between international travel and foreign equity investments. Collectively, these results suggest that tourism has positive externalities in financial markets.

Keywords: International tourism, foreign equity investments, home bias, familiarity.

JEL Classification: G11, G15

Suggested Citation

Antoniou, Constantinos and Cuculiza, Carina and Kumar, Alok and Yang, Lizhengbo, Seeing is Believing: Tourism and Foreign Equity Investments (February 2, 2024). Available at SSRN: https://ssrn.com/abstract=3270813 or http://dx.doi.org/10.2139/ssrn.3270813

Constantinos Antoniou (Contact Author)

University of Warwick - Warwick Business School ( email )

Coventry CV4 7AL
United Kingdom

Carina Cuculiza

Oklahoma State University - Stillwater - Spears School of Business ( email )

201 Business
Stillwater, OK 74078-0555
United States

Alok Kumar

University of Miami - Miami Herbert Business School ( email )

517B Jenkins Building
Department of Finance
Coral Gables, FL 33124-6552
United States
305-284-1882 (Phone)

HOME PAGE: http://sites.google.com/view/alokmiami/home

Lizhengbo Yang

Capital University of Economics and Business ( email )

Beijing
China

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