Domestic and foreign institutional investors' behavior in China

Ningyue Liu*, Don Bredin, Liming Wang, Zhihong Yi

*此作品的通讯作者

科研成果: 期刊稿件文章同行评审

65 引用 (Scopus)

摘要

This paper compares the investment characteristics between foreign funds operating under Qualified Foreign Institutional Investors (QFIIs) in China and domestic Chinese funds and analyzes the firm-level drivers that influence their allocation choices. The analysis reveals that foreign funds have a preference for a range of sectors such as transportation, metals and non-metals, and machinery, as opposed to industries with a requirement for local knowledge. The portfolios of domestic Chinese funds are distributed more evenly than those of the foreign funds. The comparative analysis indicates that foreign funds invest in firms that are significantly different from those favored by domestic funds in terms of size, profit, and compensation of management. Finally, we find that when making investment decisions, foreign funds tend to rely on some corporate governance indicators, which is not consistent with the results obtained from previous studies examining developed markets. In particular, foreign funds have a preference for firms with a high percentage of state-owned shares, while the reverse is the case for domestic funds. These empirical findings highlight the differences between QFII and domestic fund investment preferences and will be of value to policy-makers in emerging markets, and China, in particular, in gauging the important drivers of foreign investment.

源语言英语
页(从-至)728-751
页数24
期刊European Journal of Finance
20
7-9
DOI
出版状态已出版 - 9月 2014
已对外发布

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