| Home Bias under Economic Crisis: Based on the 2008 Global Economic Crisis |
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Chang Soo Kim, Kwang Woo Park |
| 경제위기 하에서의 자국편향 현상 |
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김창수, 박광우 |
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| Abstract |
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It is a well-known empirical regularity that investors appear to have home bias in international portfolio diversification. In this paper, we investigate whether the home bias property driven by asymmetric information causes differences in raising capital, investment and performance between foreign and domestic firms. Our empirical results show that when an economy is undergoing a rapid credit crisis, foreign companies face much disadvantage in fund raising than domestic firms. This will lead to staggered corporate investment and business performance of foreign firms and these firms will experience the reduced growth and profitability. In addition, foreign firms turn out to have difficulties in maintaining liquidity after the onset of the credit crisis. However, we do not find differences in investments and firm performances between foreign and domestic companies over non-crisis periods, consistent with the argument of home-bias. Consideration of other factors that can cause similar empirical findings such as difference in business characteristics between foreign and domestic firms does not negate the home-bias argument. |
| Key Words:
경제위기,대응추정치,자국편향,정보비대칭,차이의 차이 검증,Difference-in-Difference Estimator,Economic Crisis,Home Bias,Information Asymmetry,Matching Estimator |
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