Information Asymmetries and Institutional Investor Mandates

Information Asymmetries and Institutional Investor Mandates

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...

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Bibliographic Details
Main Author:	Didier, Tatiana
Format:	Policy Research Working Paper
Language:	English
Published:	2012
Subjects:	ABNORMAL RETURN ACCOUNTING ADVERSE SELECTION ASSET BASE ASSET HOLDINGS ASSET PRICES ASSET PRICING ASSET PRICING ANOMALIES ASSET RETURN ASSETS ASSETS UNDER MANAGEMENT AVERAGE FUND BALANCE SHEET BARRIERS TO INVESTMENT BONDS BOOK VALUE BORROWERS CAPITAL FLOWS CAPITAL MARKET CASH FLOW CASH FLOWS COUNTRY RISKS DEBT DEBT MARKETS DEVELOPING COUNTRIES DISCLOSURE DISCLOSURE OF INFORMATION DIVERSIFICATION DIVERSIFIED PORTFOLIOS DIVIDEND DIVIDEND YIELD DOMESTIC INSTITUTIONAL INVESTORS DOMESTIC INVESTMENTS DOMESTIC INVESTORS DOMESTIC MARKET DOMESTIC PORTFOLIOS DOMESTIC STOCK DUMMY VARIABLE EARNINGS GROWTH EMERGING MARKET EMERGING MARKET ASSETS EMERGING MARKET EQUITY EMERGING MARKET EQUITY PORTFOLIOS EMERGING MARKET FUNDS EQUITIES EQUITY EQUITY HOLDINGS EQUITY MARKETS EQUITY MUTUAL FUNDS EQUITY PRICES FINANCE FINANCE CORPORATION FINANCIAL ANALYSTS FINANCIAL ASSETS FINANCIAL COMPANY FINANCIAL DISTRESS FINANCIAL HEALTH FINANCIAL MARKETS FINANCIAL STUDIES FOREIGN ASSET FOREIGN EQUITY FOREIGN EXCHANGE FOREIGN FUNDS FOREIGN HOLDINGS FOREIGN INSTITUTIONAL INVESTORS FOREIGN INVESTMENT FOREIGN INVESTMENTS FOREIGN INVESTOR FOREIGN INVESTORS FOREIGN PORTFOLIO FOREIGN STOCKS FUND CHARACTERISTIC FUND CHARACTERISTICS FUND MANAGERS FUND SIZE FUND TYPE FUND TYPES FUTURE GLOBAL FUND GLOBAL FUNDS GLOBAL MARKET GLOBAL MUTUAL FUND GLOBAL MUTUAL FUNDS GLOBALIZATION GLOBALIZATION OF SECURITIES GUARANTEE HEDGE HEDGE FUNDS HOME COUNTRY INCOME INDIRECT BARRIERS INDIVIDUAL INVESTORS INFORMATION ASYMMETRIES INFORMATION DISCLOSURE INFORMATION DISCLOSURES INFORMATIONAL ASYMMETRIES INFORMED INVESTORS INSTITUTIONAL INVESTOR INSTITUTIONAL INVESTORS INTERESTS INTERNATIONAL BANK INTERNATIONAL CAPITAL INTERNATIONAL CAPITAL FLOWS INTERNATIONAL DIVERSIFICATION INTERNATIONAL ECONOMICS INTERNATIONAL FINANCE INTERNATIONAL FINANCIAL MARKETS INTERNATIONAL INVESTMENT INTERNATIONAL INVESTMENTS INTERNATIONAL INVESTORS INTERNATIONAL MARKETS INTERNATIONAL PORTFOLIO INVESTING INVESTMENT INVESTMENT BEHAVIOR INVESTMENT DECISIONS INVESTMENT FLOWS INVESTMENT MANAGERS INVESTMENT OPPORTUNITY ISSUANCE LIABILITIES LIQUID ASSETS LIQUIDITY LOCAL INVESTORS LOCAL MARKETS LOW-INCOME COUNTRIES MARKET CAPITALIZATION MARKET PARTICIPANTS MARKET SEGMENTATION MARKET VALUE MIDDLE-INCOME COUNTRIES MINIMUM INVESTMENT MINIMUM INVESTMENT REQUIREMENTS MUTUAL FUND MUTUAL FUND DATA MUTUAL FUND HOLDINGS MUTUAL FUND INDUSTRY MUTUAL FUND INVESTMENTS MUTUAL FUND MANAGERS MUTUAL FUND OWNERSHIP MUTUAL FUND PERFORMANCE MUTUAL FUND PORTFOLIO MUTUAL FUND PORTFOLIO HOLDINGS MUTUAL FUND PORTFOLIOS NET ASSETS NUMBER OF SHARES OPTIMAL PORTFOLIO OPTION OUTSTANDING SHARES PARTICULAR COUNTRIES PENSION PENSION FUNDS PERFORMANCE MEASURE PORTFOLIO PORTFOLIO CHOICE PORTFOLIO CHOICES PORTFOLIO HOLDINGS PORTFOLIO INVESTMENT PORTFOLIO INVESTMENTS PORTFOLIO WEIGHT PORTFOLIO WEIGHTS PORTFOLIOS POSITIVE COEFFICIENT PRICE PRICE-EARNINGS RATIO PRIVATE PLACEMENTS PROTECTION OF MINORITY SHAREHOLDER REGIONAL FUNDS RETURN ON ASSETS RETURNS RETURNS ON STOCKS RISK RISK AVERSION RISK FACTORS RISK SHARING RISKS SECURITIES SECURITIES MARKETS SECURITY SHARE SHAREHOLDER SHAREHOLDER PROTECTION SHARES SINGLE ASSET STOCK STOCK CHARACTERISTICS STOCK EXCHANGE STOCK EXCHANGES STOCK MARKET STOCK MARKET TRADING STOCK RETURNS STOCKHOLDINGS STOCKS TRADE DAY TRADES TRADING TRADING ACTIVITY TRADING COSTS TRANSACTION TRANSACTION COST TRANSACTION COSTS TURNOVER TURNOVER RATIO TYPE OF INVESTOR UNINFORMED INVESTOR UNINFORMED INVESTORS VALUATION VOLATILITY WORLD FUNDS
Online Access:	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20110310145840 http://hdl.handle.net/10986/3353

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Summary:	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.

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