Home-country Ownership Structure of Foreign Institutional Investors and Control-Ownership Disparity in Emerging Markets
- Home-country Ownership Structure of Foreign Institutional Investors and Control-Ownership Disparity in Emerging Markets
- Kim, Woochan; Sung, Taeyoon
- corporate governance; foreign portfolio investment; Asian financial crisis
- Issue Date
- Series/Report no.
- KDI Working Paper Series;07-08
- Disparity between control and ownership rights is common in emerging markets. This paper
studies three related questions regarding its effect on the positions of international institutional
investors. First, are international investors averse to holding those stocks with a large disparity?
Second, does the attitude toward the disparity depend on the quality of corporate governance of
the investors’ home country? Third, was the Asian financial crisis a wake-up call that induced
international investors to attach more weight to corporate governance problems in emerging
markets? By employing two unique datasets on foreign investment and corporate governance in
Korea, the paper finds that the answers are affirmative to all three questions but with interesting
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