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@article{ea1d6a51529243f88bba2a07e5b9f2b3,
title = "Do locals know better? A comparison of the performance of local and foreign institutional investors",
abstract = "We compare the performance of local versus foreign institutional investors using a comprehensive data set of equity holdings in 32 countries during the 2000–2010 period. We find that foreign institutions perform as well as local institutions on average, but only domestic institutions show a trading pattern consistent with an information advantage. Our results suggest a smart-money effect of local institutions in countries subject to higher information asymmetry, non-English speaking countries, countries with less efficient stock markets, with poor investor protection, or high levels of corruption. The local advantage is more pronounced in periods of market turmoil and in illiquid stocks.",
keywords = "Institutional investors, Local and foreign, Mutual funds",
author = "Ferreira, {Miguel A.} and Pedro Matos and Pereira, {João Pedro dos Santos Sousa} and Pedro Pires",
year = "2017",
month = "9",
doi = "10.1016/j.jbankfin.2017.06.002",
volume = "82",
pages = "151--164",

}

RIS

TY - JOUR

T1 - Do locals know better? A comparison of the performance of local and foreign institutional investors

AU - Ferreira,Miguel A.

AU - Matos,Pedro

AU - Pereira,João Pedro dos Santos Sousa

AU - Pires,Pedro

PY - 2017/9/1

Y1 - 2017/9/1

N2 - We compare the performance of local versus foreign institutional investors using a comprehensive data set of equity holdings in 32 countries during the 2000–2010 period. We find that foreign institutions perform as well as local institutions on average, but only domestic institutions show a trading pattern consistent with an information advantage. Our results suggest a smart-money effect of local institutions in countries subject to higher information asymmetry, non-English speaking countries, countries with less efficient stock markets, with poor investor protection, or high levels of corruption. The local advantage is more pronounced in periods of market turmoil and in illiquid stocks.

AB - We compare the performance of local versus foreign institutional investors using a comprehensive data set of equity holdings in 32 countries during the 2000–2010 period. We find that foreign institutions perform as well as local institutions on average, but only domestic institutions show a trading pattern consistent with an information advantage. Our results suggest a smart-money effect of local institutions in countries subject to higher information asymmetry, non-English speaking countries, countries with less efficient stock markets, with poor investor protection, or high levels of corruption. The local advantage is more pronounced in periods of market turmoil and in illiquid stocks.

KW - Institutional investors

KW - Local and foreign

KW - Mutual funds

UR - http://www.scopus.com/inward/record.url?scp=85021039742&partnerID=8YFLogxK

U2 - 10.1016/j.jbankfin.2017.06.002

DO - 10.1016/j.jbankfin.2017.06.002

M3 - Article

VL - 82

SP - 151

EP - 164

ER -

ID: 2911109