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Foreign investor behavior in Korea after the 1997 Asian financial crisis

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  • Joe, Denis Yongmin
  • Oh, Frederick Dongchuhl

Abstract

In this study, we investigate the behavior of foreign investors in the Korean stock market after the 1997 Asian financial crisis (1999–2014). We analyze the industrial distribution of foreign ownership and find that foreign investors hold fewer stocks in the manufacturing sectors than in the non-manufacturing sectors. We also find that foreign equity investments are concentrated in firms above a certain size. Moreover, foreign investors show a preference for large, profitable, highly liquid, and growth firms, as well as firms with large boards. However, after controlling for other firm-specific factors, we find that chaebol (Korean business group) firms are not more attractive to foreign investors than non-chaebol firms. Finally, we show that foreign investors achieve success as financial investors in Korea. (JEL F21, G11, G15)

Suggested Citation

  • Joe, Denis Yongmin & Oh, Frederick Dongchuhl, 2017. "Foreign investor behavior in Korea after the 1997 Asian financial crisis," Journal of the Japanese and International Economies, Elsevier, vol. 46(C), pages 69-78.
    • Handle: RePEc:eee:jjieco:v:46:y:2017:i:c:p:69-78
    DOI: 10.1016/j.jjie.2017.10.002
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    Cited by:

    1. Shoukat Ali & Ramiz Ur Rehman & Muhammad Ishfaq Ahmad & Joe Ueng, 2021. "Does Board Diversity Attract Foreign Institutional Ownership? Insights from the Chinese Equity Market," JRFM, MDPI, vol. 14(11), pages 1-15, October.
    2. R. Heru Kristanto HC, 2021. "The Impact of Bank Behavior, Financial Literacy on Investment Decisions, Mediation of Financial Inclusion and Debt Behavior. Study on Working Capital and Investment Debtors at Regional Development Ban," Technium Social Sciences Journal, Technium Science, vol. 23(1), pages 626-635, September.
    3. Lee, Junyong & Oh, Frederick Dongchuhl, 2024. "Do foreign investors make firms more transparent? Evidence from Korea," Journal of Multinational Financial Management, Elsevier, vol. 74(C).
    4. Yoonmin Kim & Gab-Je Jo, 2019. "The Impact of Foreign Investors on the Stock Price of Korean Enterprises during the Global Financial Crisis," Sustainability, MDPI, vol. 11(6), pages 1-13, March.

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    More about this item

    Keywords

    Foreign investors; 1997 Asian financial crisis; Size cutoff; Investment performance; Investment pattern;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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