Information Asymmetries and Institutional Investor Mandates

The preference among foreign institutional investors for large firms is widely documented. This paper deepens our understanding of international investments by providing evidence that foreign institutional investors with broader investment scopes prefer to invest in firms where they are less prone to information disadvantages than more specialized ones. In other words, there is heterogeneity in how information asymmetries affect investors' portfolio choices. Theoretically, a model with costly information and short-selling constraints shows that the broader the investor's mandate, the smaller the incentives to gather and process costly information. Empirically, an analysis of the mutual fund industry in the United States supports this hypothesis.

Bibliographic Details

Main Author:	Didier, Tatiana
Language:	English
Published:	2011-03-01
Subjects:	ABNORMAL RETURN, ACCOUNTING, ADVERSE SELECTION, ASSET BASE, ASSET HOLDINGS, ASSET PRICES, ASSET PRICING, ASSET PRICING ANOMALIES, ASSET RETURN, ASSETS, ASSETS UNDER MANAGEMENT, AVERAGE FUND, BALANCE SHEET, BARRIERS TO INVESTMENT, BONDS, BOOK VALUE, BORROWERS, CAPITAL FLOWS, CAPITAL MARKET, CASH FLOW, CASH FLOWS, COUNTRY RISKS, DEBT, DEBT MARKETS, DEVELOPING COUNTRIES, DISCLOSURE, DISCLOSURE OF INFORMATION, DIVERSIFICATION, DIVERSIFIED PORTFOLIOS, DIVIDEND, DIVIDEND YIELD, DOMESTIC INSTITUTIONAL INVESTORS, DOMESTIC INVESTMENTS, DOMESTIC INVESTORS, DOMESTIC MARKET, DOMESTIC PORTFOLIOS, DOMESTIC STOCK, DUMMY VARIABLE, EARNINGS GROWTH, EMERGING MARKET, EMERGING MARKET ASSETS, EMERGING MARKET EQUITY, EMERGING MARKET EQUITY PORTFOLIOS, EMERGING MARKET FUNDS, EQUITIES, EQUITY, EQUITY HOLDINGS, EQUITY MARKETS, EQUITY MUTUAL FUNDS, EQUITY PRICES, FINANCE, FINANCE CORPORATION, FINANCIAL ANALYSTS, FINANCIAL ASSETS, FINANCIAL COMPANY, FINANCIAL DISTRESS, FINANCIAL HEALTH, FINANCIAL MARKETS, FINANCIAL STUDIES, FOREIGN ASSET, FOREIGN EQUITY, FOREIGN EXCHANGE, FOREIGN FUNDS, FOREIGN HOLDINGS, FOREIGN INSTITUTIONAL INVESTORS, FOREIGN INVESTMENT, FOREIGN INVESTMENTS, FOREIGN INVESTOR, FOREIGN INVESTORS, FOREIGN PORTFOLIO, FOREIGN STOCKS, FUND CHARACTERISTIC, FUND CHARACTERISTICS, FUND MANAGERS, FUND SIZE, FUND TYPE, FUND TYPES, FUTURE, GLOBAL FUND, GLOBAL FUNDS, GLOBAL MARKET, GLOBAL MUTUAL FUND, GLOBAL MUTUAL FUNDS, GLOBALIZATION, GLOBALIZATION OF SECURITIES, GUARANTEE, HEDGE, HEDGE FUNDS, HOME COUNTRY, INCOME, INDIRECT BARRIERS, INDIVIDUAL INVESTORS, INFORMATION ASYMMETRIES, INFORMATION DISCLOSURE, INFORMATION DISCLOSURES, INFORMATIONAL ASYMMETRIES, INFORMED INVESTORS, INSTITUTIONAL INVESTOR, INSTITUTIONAL INVESTORS, INTERESTS, INTERNATIONAL BANK, INTERNATIONAL CAPITAL, INTERNATIONAL CAPITAL FLOWS, INTERNATIONAL DIVERSIFICATION, INTERNATIONAL ECONOMICS, INTERNATIONAL FINANCE, INTERNATIONAL FINANCIAL MARKETS, INTERNATIONAL INVESTMENT, INTERNATIONAL INVESTMENTS, INTERNATIONAL INVESTORS, INTERNATIONAL MARKETS, INTERNATIONAL PORTFOLIO, INVESTING, INVESTMENT, INVESTMENT BEHAVIOR, INVESTMENT DECISIONS, INVESTMENT FLOWS, INVESTMENT MANAGERS, INVESTMENT OPPORTUNITY, ISSUANCE, LIABILITIES, LIQUID ASSETS, LIQUIDITY, LOCAL INVESTORS, LOCAL MARKETS, LOW-INCOME COUNTRIES, MARKET CAPITALIZATION, MARKET PARTICIPANTS, MARKET SEGMENTATION, MARKET VALUE, MIDDLE-INCOME COUNTRIES, MINIMUM INVESTMENT, MINIMUM INVESTMENT REQUIREMENTS, MUTUAL FUND, MUTUAL FUND DATA, MUTUAL FUND HOLDINGS, MUTUAL FUND INDUSTRY, MUTUAL FUND INVESTMENTS, MUTUAL FUND MANAGERS, MUTUAL FUND OWNERSHIP, MUTUAL FUND PERFORMANCE, MUTUAL FUND PORTFOLIO, MUTUAL FUND PORTFOLIO HOLDINGS, MUTUAL FUND PORTFOLIOS, NET ASSETS, NUMBER OF SHARES, OPTIMAL PORTFOLIO, OPTION, OUTSTANDING SHARES, PARTICULAR COUNTRIES, PENSION, PENSION FUNDS, PERFORMANCE MEASURE, PORTFOLIO, PORTFOLIO CHOICE, PORTFOLIO CHOICES, PORTFOLIO HOLDINGS, PORTFOLIO INVESTMENT, PORTFOLIO INVESTMENTS, PORTFOLIO WEIGHT, PORTFOLIO WEIGHTS, PORTFOLIOS, POSITIVE COEFFICIENT, PRICE, PRICE-EARNINGS RATIO, PRIVATE PLACEMENTS, PROTECTION OF MINORITY SHAREHOLDER, REGIONAL FUNDS, RETURN ON ASSETS, RETURNS, RETURNS ON STOCKS, RISK, RISK AVERSION, RISK FACTORS, RISK SHARING, RISKS, SECURITIES, SECURITIES MARKETS, SECURITY, SHARE, SHAREHOLDER, SHAREHOLDER PROTECTION, SHARES, SINGLE ASSET, STOCK, STOCK CHARACTERISTICS, STOCK EXCHANGE, STOCK EXCHANGES, STOCK MARKET, STOCK MARKET TRADING, STOCK RETURNS, STOCKHOLDINGS, STOCKS, TRADE DAY, TRADES, TRADING, TRADING ACTIVITY, TRADING COSTS, TRANSACTION, TRANSACTION COST, TRANSACTION COSTS, TURNOVER, TURNOVER RATIO, TYPE OF INVESTOR, UNINFORMED INVESTOR, UNINFORMED INVESTORS, VALUATION, VOLATILITY, WORLD FUNDS,
Online Access:	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20110310145840 https://hdl.handle.net/10986/3353
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