Foreign Ownership of Stocks and Long-Run Interdependence Between National Housing and Stock Markets - Evidence from Finnish Data

Foreign Ownership of Stocks and Long-Run Interdependence Between National Housing and Stock Markets - Evidence from Finnish Data
Author: Elias Oikarinen
Publisher:
Total Pages:
Release: 2015
Genre:
ISBN:
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Globalization of the financial markets may have undermined co-movement between stock and housing markets, at least in small open economies. This paper provides an empirical study on the long-term dynamic interrelation between stock and housing markets in a small open economy with special attention to the effect of foreign investors on the dynamics. The empirical findings, based on a quarterly dataset from Finland over 1970-2006, do not support the hypothesis of diminished co-movement between Finnish stock and housing markets after the abolishment of the foreign ownership restrictions of stocks in 1993. The markets still appear to be tightly interdependent in the long run. Nevertheless, the results suggest that the substantial growth in the foreign ownership of Finnish stocks induced a large and long-lasting deviation from the co-integrating long-run relation between stock and housing prices. The results also imply that diversification between stock and housing markets works the worse the longer the investment horizon is.

Stocks for All: People’s Capitalism in the Twenty-First Century

Stocks for All: People’s Capitalism in the Twenty-First Century
Author: Petri Mäntysaari
Publisher: Walter de Gruyter GmbH & Co KG
Total Pages: 1037
Release: 2021-12-31
Genre: Law
ISBN: 3110761327
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Public stock markets are too small. This book is an effort to rescue public stock markets in the EU and the US. There should be more companies with publicly-traded shares and more direct share ownership. Anchored in a broad historical study of the regulation of stock markets and companies in Europe and the US, the book proposes ways to create a new regulatory regime designed to help firms and facilitate people’s capitalism. Through its comparative and historical study of regulation and legal practices, the book helps to understand the evolution of public stock markets from the nineteenth century to the present day. The book identifies design principles that reflect prior regulation. While continental European company law has produced many enduring design principles, the recent regulation of stock markets in the EU and the US has failed to serve the needs of both firms and retail investors. The book therefore proposes a new set of design principles to serve contemporary societal needs.

Why is There a Home Bias?

Why is There a Home Bias?
Author: Jun-Koo Kang
Publisher:
Total Pages: 56
Release: 1995
Genre: Capital market
ISBN:
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This paper uses data on foreign stock ownership in Japan from 1975 to 1991 to examine the determinants of the home bias in portfolio holdings. Existing models of international portfolio choice predicting that foreign investors hold national market portfolios or portfolios tilted towards high expected return stocks are inconsistent with the evidence provided in this paper. We document that foreign investors overweight shares of firms in manufacturing industries, large firms, firms with good accounting performance, firms with low unsystematic risk, and firms with low leverage. Controlling for size, there is evidence that small firms that export more have greater foreign ownership. Foreign investors do not perform significantly worse than if they held the Japanese market portfolio, however. After controlling for firm size, there is no evidence that foreign ownership is related to expected returns of shares. We show that a model with size-based informational asymmetries and deadweight costs can yield asset allocations consistent with our evidence.