Title: The Value of Clean Hands: Public Policy and International Asset Allocation
Authors: Sercu, Piet
VanpƩe, Rosanne
Issue Date: Jun-2011
Conference: Multinational Finance Conference edition:18 location:Rome date:26-29 June 2011
Abstract: Despite of the intuitive idea that corporate governance and transparency are crucial for a country's international appeal, foreign portfolio investors appear to care first and foremost about transparency, predictability and honesty in governments. This is, at least, what our analysis of international portfolio holdings implies. Our estimates further indicate that (i) a feasible improvement of government corruption, economic policy transparency and especially institutional quality can trigger an economically substantial rise in foreign interest for the stocks of that country; and (ii) an amelioration in country-level governance variables creates significantly higher effects on foreign equity demand than an improvement in traditional macroeconomic policy indicators.
Publication status: published
KU Leuven publication type: IMa
Appears in Collections:Research Center International Finance, Leuven
Research Centre for Finance, Accountancy & Tax, Campus Brussels (-)
Faculty of Economics and Business (FEB) - miscellaneous

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