Information Asymmetries and Institutional Investor Mandates

• Tác giả: Tatiana Didier
• Ngôn ngữ: eng
• Ký hiệu phân loại: 332.62 Securities brokers
• Thông tin xuất bản: 2012
• Bộ sưu tập: Tài liệu truy cập mở
• ID: 295577
• Chủ đề: 1. ABNORMAL RETURN; 2. ACCOUNTING; 3. ADVERSE SELECTION; 4. ASSET BASE; 5. ASSET HOLDINGS

Tóm tắt

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.