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Foreign and Local Institutional Ownership and the Speed of Price Adjustment
Author(s) -
Park Young K.,
Chung Kee H.
Publication year - 2007
Publication title -
journal of business finance and accounting
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.282
H-Index - 77
eISSN - 1468-5957
pISSN - 0306-686X
DOI - 10.1111/j.1468-5957.2007.02040.x
Subject(s) - institutional investor , business , foreign ownership , stock (firearms) , monetary economics , stock price , financial system , economics , finance , foreign direct investment , corporate governance , macroeconomics , mechanical engineering , paleontology , series (stratigraphy) , biology , engineering
This paper examines the relation between the speed of price adjustment and stock ownership by foreign and local institutional investors using data from the Korean stock market. We show that returns of stocks with high foreign institutional ownership lead returns of stocks with low foreign institutional ownership, especially after foreign ownership restriction is lifted. Likewise, returns of stocks with high local institutional ownership lead returns of stocks with low local institutional ownership. These results support the idea that foreign institutional (local institutional) investors have faster access to or processing power of new information than local institutional (local individual) investors.