Abstract: We study the impact of foreign institutional investors on global capital allocation and welfare using firm-level international data. Using MSCI index inclusion and the passage of the U.S. Jobs and Growth Tax Relief Reconciliation Act as exogenous shocks to foreign ownership, we show that greater foreign ownership leads to more informative stock prices and this effect arises more from increased price efficiency than from improved firm governance. We further show that the impact of capital flows on price efficiency is due to real efficiency gains, as opposed to better information disclosure. Finally, we show that foreign ownership increases market liquidity, reduces firms’ cost of equity, and leads to subsequent growth in their real investments, thus improving overall welfare.
Marcin Kacperczyk is a Professor of Finance at Imperial College London. His research, in the area of empirical asset pricing and financial intermediation, has been published in leading academic and practitioner journals, including Econometrica, Quarterly Journal of Economics, Journal of Finance, Journal of Financial Economics, Journal of Monetary Economics, and Review of Financial Studies. He is Research Associate at the Center for Economic Policy Research, Research Consultant at the European Central Bank, a former Faculty Research Fellow at the National Bureau of Economic Research, and Associate Editor for Financial Management, the Journal of Financial and Quantitative Analysis, Review of Financial Studies, Review of Finance, and Management Science..
Time and Place: April 4, 2019, 16:15,
University of Piraeus, 80 Karaoli & Dimitriou Str., Piraeus,
More Upcoming Seminars in 2019:
April 11, 2019: Florian Heider, European Central Bank
May 23, 2019: Michael Brennan, University of California at Los Angeles (UCLA) and University of Manchester
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