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Do domestic investors have an edge? The trading experience of foreign investors in Korea

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  • Do domestic investors have an edge? The trading experience of foreign investors in Korea
  • Hyuk Choe, Bong-Chan Kho, Rene M. Stulz
  • National Bureau of Economic Research


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Title Do domestic investors have an edge? The trading experience of foreign investors in Korea
Similar Titles
Material Type Reports
Author(English)

Hyuk Choe, Bong-Chan Kho, Rene M. Stulz

Publisher

Cambridge:National Bureau of Economic Research

Date 2004-05
Series Title; No NBER Working Paper Series / 10502
Pages 49
Subject Country South Korea(Asia and Pacific)
Language English
File Type Link
Original Format pdf
Subject Economy < Financial Policy
Holding National Bureau of Economic Research

Abstract

We investigate whether domestic investors have an edge over foreign investors in trading domestic stocks. Using Korean data, we show that foreign money managers pay more than domestic money managers when they buy and receive less when they sell for medium and large trades. The sample average daily trade-weighted disadvantage of foreign money managers is of 21 basis points for purchases and 16 basis points for sales. There is also some evidence that domestic individual investors have an edge over foreign investors. The explanation for these results is that prices move more against foreign investors than against domestic investors before trades.