Do Domestic and Foreign Fund Managers Have Similar Preferences for Stock Characteristics? A Cross-Country Analysis

EFA 2001 Barcelona Meetings

Journal of International Business Studies, Forthcoming

44 Pages Posted: 5 Jul 2001

See all articles by Vicentiu Covrig

Vicentiu Covrig

California State University, Northridge - Department of Finance, Financial Planning and Insurance

Sie Ting Lau

Nanyang Technological University (NTU) - Division of Banking & Finance

Lilian Ng

Schulich School of Business, York University; European Corporate Governance Institute (ECGI)

Abstract

Using a new and unique dataset on mutual fund stockholdings, we identify several interesting similarities and differences in the stock preferences of domestic and foreign fund managers from 11 developed countries. Our results show that both groups of fund managers consider basic stock characteristics important in their investment decisions. However, foreign managers, while not domestic managers, tend to be biased towards globally visible stocks, even after controlling for investment styles. The demand for such stocks is strong when the objective of their funds is to diversify globally or across regions, but weakens when their stock holdings are concentrated mainly in the same local market as domestic managers. The latter implies that the geographic location of managers might matter. Finally, the results also show that managers from three different regional markets exhibit similar stock preferences.

Keywords: home bias, fund managers, institutional trading, foreign, domestic, stock characteristics

JEL Classification: F3, G1, G2

Suggested Citation

Covrig, Vicentiu and Lau, Sie Ting and Ng, Lilian, Do Domestic and Foreign Fund Managers Have Similar Preferences for Stock Characteristics? A Cross-Country Analysis. EFA 2001 Barcelona Meetings, Journal of International Business Studies, Forthcoming, Available at SSRN: https://ssrn.com/abstract=275913 or http://dx.doi.org/10.2139/ssrn.275913

Vicentiu Covrig (Contact Author)

California State University, Northridge - Department of Finance, Financial Planning and Insurance ( email )

Northridge, CA 91330-8379
United States

Sie Ting Lau

Nanyang Technological University (NTU) - Division of Banking & Finance ( email )

S3-B1B-76 Nanyang Avenue
Singapore, 639798
Singapore
65 790 6051 (Phone)
65 791 3697 (Fax)

Lilian Ng

Schulich School of Business, York University ( email )

N223, Seymour Schulich Building
4700 Keele Street
Toronto, Ontario ON M3J 1P3
Canada
+1.416.736.2100 x77994 (Phone)

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

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