Foreign Institutional investors and Information efficiency  

Oleh:

Cao, Jerry ; Goh, Jeremy ; Li, Donghui

Jenis: Article from Proceeding
Dalam koleksi: SIBR-Thammasat 2014 Conference on Interdisciplinary Business & Economics Research June 5th- 7th, 2014 di Emerald Hotel Bangkok, page 1-64.
Topik: Foreign ownership; institutional investors; information transmission; efficiency
Fulltext: b14-055.pdf (648.77KB)

Isi artikel

This study investigates the role of foreign institutional ownership in the transmission of global and local market information based on a sample of 29,652 firms across 56 countries from 1999 to 2011. We show that foreign institutional ownership is related to the enhanced informational efficiency, evidenced by a reduction in the delay of stock price adjustment to value-relevant information. Furthermore, we find that foreign portfolio investors drive the improvement in informational efficiency, while foreign blockholders play a minimalistic role. We also find that investors located in developed countries are the main source of the information advantage held by foreign investors. Finally, we show that foreign investors act as a substitute for good institutional structures and reduce the negative implications associated with a poor institutional environment.

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