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Foreign shareholding: A decomposition analysis

Author

Listed:
  • Shah, Ajay

    (National Institute of Public Finance and Policy)

  • Patnaik, Ila

    (National Institute of Public Finance and Policy)

Abstract

Stulz (2005) has emphasised that for home bias to decline, insiders have to reduce ownership so as to make purchase of shares by foreigners possible. We offer a decomposition in the ownership of shares by foreigners into three parts: the change in insider shareholding, the change in market capitalisation and the change in the fraction of outside shareholding that is held by foreigners. As an example, this decomposition is applied to help understand the sharp change in foreign ownership of Indian firms after 2001.

Suggested Citation

  • Shah, Ajay & Patnaik, Ila, 2010. "Foreign shareholding: A decomposition analysis," Working Papers 10/74, National Institute of Public Finance and Policy.
    • Handle: RePEc:npf:wpaper:10/74
    Note: Working Paper 74, 2010
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    References listed on IDEAS

    as
    1. Bong‐Chan Kho & René M. Stulz & Francis E. Warnock, 2009. "Financial Globalization, Governance, and the Evolution of the Home Bias," Journal of Accounting Research, Wiley Blackwell, vol. 47(2), pages 597-635, May.
    2. René M. Stulz, 2007. "The Limits of Financial Globalization," Journal of Applied Corporate Finance, Morgan Stanley, vol. 19(1), pages 8-15, January.
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    More about this item

    Keywords

    Home bias; Foreign investors;

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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