TY  - JOUR
AU  - Tesar,Linda L.
AU  - Werner,Ingrid M.
TI  - Home Bias and the High Turnover
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 4218
PY  - 1992
Y2  - November 1992
UR  - http://www.nber.org/papers/w4218
L1  - http://www.nber.org/papers/w4218.pdf
N1  - Author contact info:
Linda Tesar
Department of Economics
University of Michigan
Ann Arbor, MI  48109-1220
Tel: 734/763 6015
Fax: 734/764-2769
E-Mail: ltesar@umich.edu
AB  - This paper documents the available evidence on international portfolio investment in five GECD countries. We draw three conclusions from the data. First. there is strong evidence of a home bias in national investment portfolios despite the potential gains from international diversification. Second, to the extent investors hold international securities, the composition of the portfolio of foreign securities seems to reflect factors other than diversification of risk. Third, the high volume of cross-border capital flows and the high turnover rate on foreign equity investments relative to domestic equity markets suggests that transactions costs and incomplete information are unlikely to be important deterrents to international investment. These observations suggest that a richer set of models is required to account for international investment behavior.
ER  -