Gravity and culture in foreign portfolio investment
By Raj Aggarwal, Colm Kearney, Brian M. Lucey. 2012
214 citations recorded by the source corpus.
Using panel regression estimates from the IMF’s CPIS survey of foreign debt and equity portfolios across 174 originating and 50 destination countries from 2001 to 2007, we clarify the role of culture and extend the set of cultural variables that have been investigated in gravity models of foreign portfolio investment (FPI). Incorporating Hofstede’s cultural dimensions of individualism, masculinity, power distance and uncertainty avoidance, we show how cultural traits in both originating and destination countries, as well as the cultural distances that separate them, interact with geographic distance and other gravity variables to determine global FPI patterns. We find hitherto unreported effects and show that while gravity always deters FPI, aspects of culture and cultural distance can offset this by supporting FPI.
Subfields: Demography, Economics and Econometrics, Sociology and Political Science
View Paper: https://www.semanticscholar.org/paper/47271f5257ada4b68c65a1e30395795fd71c0dcc
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Citations in the corpus
- Rethinking financial contagion: Information transmission mechanism during the COVID-19 pandemic (2020, unknown): “integration process, others, such as various regulatory barriers, can slow it down and constrain it (Aggarwal et al., 2010). Integration is a dynamic process and it is related to increasing financial liberalization, globalization and economic development and absence of arbitrage opportunities among ”
- The impact of cultural diversity in corporate boards on firm performance (2016, unknown): “National cultural factors have been shown to influence financing decisions (Aggarwal and Goodell, 2009; Aggarwal et al., 2012: Zheng et al. 2012), portfolio diversification and trading strategies (Siegel et al., 2011; Beugelsdijk and Frijns, 2010; Chui et al., 2010), merger and acquisition…”
- The effects of national culture and behavioral pitfalls on investors' decision-making: Herding behavior in international stock markets ☆ (2015, background): “Aggarwal, Kearney, and Lucey (2012) show that the aspects of culture can promote foreign portfolio management.”