Who Invests in and What Drives Equity Ownership Around the World | Lucie Y. Lu

Who Invests in and What Drives Equity Ownership Around the World

Abstract

We exploit the increasing availability of international stock holdings data to examine ownership by different stakeholders in 46 markets. Home bias varies across countries, investor types, and is still much higher in emerging markets (EMs). Institutions have become more global but remain underdiversified. The country effect in institutional ownership of EM stocks is large and of similar economic significance as country factors in explaining EM stock returns. Institutions of different types and domicile continue to show strong preference for large firms but exhibit significant differences for the other firm characteristics. The preference of foreign institutions for cross-listed firms continues and is stronger in EMs. The firm characteristics that matter most for US institutions vary significantly across markets and especially in EM countries. Retail investors are mostly present in small and liquid firms.

Publication
Working Paper