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| Tekijä: | Lau, S. T. Ng, L. Zhang, B. |
| Otsikko: | The world price of home bias |
| Lehti: | Journal of Financial Economics
2010 : AUG, VOL 97:2, p. 191-217 |
| Asiasana: | funds capital costs market segmentation bias international capital market |
| Kieli: | eng |
| Tiivistelmä: | It is argued in prior research that an increase in the level of a country's home bias results in increase in the country's cost of capital, due to the reduction of the global risk sharing between domestic and foreign investors. This article studies a data sample of 38 markets and finds that the international differences in the cost of capital associate positively with home bias. This finding is consistent with the predictions of prior literature, and is robust to varying cost of capital proxies, control variables, alternative home bias measures, international tradability of stocks and alternative specifications. The results of the study indicate that a country may lower its cost of capital by reducing the level of its home bias. |
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