The Equity Home Bias Puzzle is popular PDF and ePub book, written by Ian Cooper in 2013, it is a fantastic choice for those who relish reading online the International finance genre. Let's immerse ourselves in this engaging International finance book by exploring the summary and details provided below. Remember, The Equity Home Bias Puzzle can be Read Online from any device for your convenience.
The Equity Home Bias Puzzle Book PDF Summary
Home bias - the empirical phenomenon that investors assign anomalously high weights to their own domestic assets - has puzzled academics for decades: financial theory predicts that an internationally well diversified portfolio of stocks and short-term bonds can reduce risk significantly without affecting expected return. Although the globalization of international equity markets has increased international investments, equity portfolios remain severely home biased today, and no single explanation seems to solve the puzzle completely. In this paper, we first provide a thorough description of the equity home bias phenomenon by defining, discussing, and applying the competing measures and presenting some estimates of the costs of under-diversification. Second, we evaluate the explanations for the equity home bias proposed in the literature such as information asymmetries, behavioral aspects, barriers to foreign investment, and governance issues, and conclude that each explanation on its own falls short, suggesting that the equity home bias probably reflects a combination of factors. Lastly, we review the implications of international under-diversification for portfolio formation and the cost of capital of companies.
Detail Book of The Equity Home Bias Puzzle PDF
- Author : Ian Cooper
- Release : 01 October 2024
- Publisher : Unknown
- ISBN : 1601987633
- Genre : International finance
- Total Page : 133 pages
- Language : English
- PDF File Size : 11,9 Mb
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