Foreign Investments of U.S. Individual Investors: Causes and Consequences

@article{Bailey2008ForeignIO,
  title={Foreign Investments of U.S. Individual Investors: Causes and Consequences},
  author={Warren Bailey and Alok Kumar and David Ng},
  journal={Management Science},
  year={2008},
  volume={54},
  pages={443-459}
}
Using thousands of brokerage accounts of U.S. individual investors, we analyze the motivations and consequences of foreign equity investment. We find that diversification is not the only reason that investors trade foreign securities. While wealthier, more experienced investors enjoy an informational advantage and, thus, are more likely to invest overseas and experience good portfolio performance, other investors appear to venture abroad for the wrong reasons. In particular, behaviorally-biased… CONTINUE READING
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