We study the role of bilateral political relations in explaining variations in the equity portfolio allocation of foreign institutional investors. Using a large micro sample at the fund-firm-year level, we find that when the relations between two countries become more distant, institutional...

Employing an event study approach on the US-China trade conflict, we find that Chinese listed firms with institutional investor holdings exhibit smaller announcement loss than their counterparts. We also examine the heterogeneous effects of firms. Specifically, the positive effect of...