Does financial development result in capital being reallocated more rapidly to industries where it is most productive? We argue that if this was the case, financially developed countries should see faster growth in industries with investment opportunities due to global demand and productivity...

This paper examines the role of investment opportunities and free cash flow in explaining the source of the stock valuation effects of secured debt offerings. We find a significantly positive relation between a firm's investment opportunities and its stock price response to announcements of...

Modern portfolio theory suggests that the best strategy to reduce portfolio risk is to diversify internationally rather than nationally. However, despite the gains from international portfolio diversification investors still overweight their portfolios with the domestic assets. This is referred...

Research suggests that informational differences, including familiarity with domestic securities, underlie home equity bias. We suggest that home bias can arise more subtly. The bias may simply occur because individuals are more comfortable with domestic companies, irrespective of information or...

The change in the country’s investment policies has been a crucial factor in building up confidence in the country’s economic prospects. Despite the reforms undertaken, the country’s performance in attracting foreign direct investment is still lower than its neighboring countries. This...

Data on corporate governance and disclosure practices reveal wide within-country variation that decreases with the strength of investors' legal protection. A simple model identifies three firm attributes related to that variation: investment opportunities, external financing, and ownership...

Modern portfolio theory suggests that the best strategy to reduce portfolio risk is to diversify internationally rather than nationally. However, despite the gains from international portfolio diversification investors still overweight their portfolios with the domestic assets. This is referred...

Research suggests that informational differences, including familiarity with domestic securities, underlie home equity bias. We suggest that home bias can arise more subtly. The bias may simply occur because individuals are more comfortable with domestic companies, irrespective of information or...