2012
DOI: 10.2139/ssrn.1014361
|View full text |Cite
|
Sign up to set email alerts
|

Gravity and Culture in Foreign Portfolio Investment

Abstract: 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 countri… Show more

Help me understand this report

Search citation statements

Order By: Relevance

Paper Sections

Select...
1
1
1
1

Citation Types

4
72
2
1

Year Published

2015
2015
2022
2022

Publication Types

Select...
9
1

Relationship

1
9

Authors

Journals

citations
Cited by 49 publications
(79 citation statements)
references
References 106 publications
4
72
2
1
Order By: Relevance
“…The work here is dominantly in accounting, finance and entrepreneurship and is orientated around the impact of culture on investment and performance. It is best represented by articles such as Aggarwal, Kearney and Lucey (2012) and Ahern, Daminelli and Fracassi (2015). The journals in which these papers appear are very diverse, with two papers appearing in JIBS and four in the Journal of Banking & Finance.…”
Section: Insert Figures 2 and 3 Herementioning
confidence: 99%
“…The work here is dominantly in accounting, finance and entrepreneurship and is orientated around the impact of culture on investment and performance. It is best represented by articles such as Aggarwal, Kearney and Lucey (2012) and Ahern, Daminelli and Fracassi (2015). The journals in which these papers appear are very diverse, with two papers appearing in JIBS and four in the Journal of Banking & Finance.…”
Section: Insert Figures 2 and 3 Herementioning
confidence: 99%
“…The coefficient estimate for the culture variable is negative and significant and indicates that the smaller the cultural difference between the country pairs, the higher the time-varying correlations. Aggarwal et al (2012) and Lucey and Zhang (2010) use a cultural variable to explain the international portfolio flows and argue that cultural distance acts as a proxy for transaction costs, information asymmetries, and lower levels of A c c e p t e d M a n u s c r i p t familiarity, as well as the existence of agency problems that tend to make foreign investors shy away. We observe that during the GFC, the cultural distance variable becomes highly significant with larger coefficients that indicate the GFC transmits through behavioral factors.…”
Section: Analysis and Discussionmentioning
confidence: 99%
“…In this context, language is viewed as a skill and a productivity tool, so that learning one or more languages is seen as an investment in human capital that can bring economic benefits. For example, studies of international trade show, cross-linguistic communication imposes higher costs than communications in a common language so that trade between countries with different languages is much less than trade between countries with a common language (Aggarwal et al, 2012;Egger and Lassmann, 2012). As a study of the effectiveness of Japanese financial reports translated into English shows linguistic differences also make cross-border communications less efficient and less effective (Aggarwal et al, 1991).…”
Section: Importance Of Cross-border Linguistic Skillsmentioning
confidence: 99%