We examine whether foreign equity holdings of portfolio investors depend on the level of information accessibility between the investors’ home and host countries. Using a comprehensive data set, alternative measures of information accessibility and robust analytical techniques, we show that differences in access to cross-country information significantly influence investors’ portfolio allocation decisions. Furthermore, the results suggest that for a given level of access to information, investors prefer to invest more in countries with a higher quality of legal/macro-institutions. Finally, the findings also confirm that the implications of information accessibility are more pronounced when markets are turbulent.
- access to information
- international equity portfolio investments
- panel data models
- market condition