Foreign Investors, Stock Price Informativeness, and Multinational Corporations

Public Deposited
Analytics

Downloadable Content

Download PDF
Request Version for Screen Reader
Last Modified
  • March 19, 2019
Creator
  • Han, Syung Jin
    • Affiliation: Kenan-Flagler Business School
Abstract
  • This study investigates the impact of foreign investors on stock price informativeness across 44 stock markets worldwide. I find that the positive relation between foreign institutional ownership and stock return volatility is moderated in firms with a larger proportion of foreign operations. This implies a stabilizing effect of foreign investors on stock prices of multinational corporations (MNCs). In addition, I find that current stock prices reflect more information about future earnings generated from foreign operations of firms with higher foreign institutional ownership. These results suggest that foreign investors have an informational advantage about foreign businesses of MNCs due to geographic proximity and such information is incorporated into local stock prices by their trading. Furthermore, I find that the type of information that foreign investors gather and interpret is about the demand for a firm’s products rather than about the technology used by the firm. Overall, this paper proposes a benefit of financial liberalization that foreign investors facilitate the transmission of information about foreign operations of MNCs in local stock markets.
Date of publication
Keyword
Subject
DOI
Identifier
Resource type
Rights statement
  • In Copyright
Advisor
  • Jotikasthira, Chotibhak
  • Wang, Sean
  • Lundblad, Christian
  • Le, Anh
  • Colacito, Riccardo
Degree
  • Doctor of Philosophy
Degree granting institution
  • University of North Carolina at Chapel Hill Graduate School
Graduation year
  • 2015
Language
Publisher
Place of publication
  • Chapel Hill, NC
Access right
  • There are no restrictions to this item.
Date uploaded
  • January 21, 2016

Relations

Parents:

This work has no parents.

Items

Thumbnail Title Date Uploaded Visibility Actions
file details Han_unc_0153D_15797.pdf 2019-04-10 Public Download