Title : Asymmetric Information or Asymmetric Reputation? : A Theory on Why Foreigners Earn So Much in a Small Open Emerging Market
In this paper, we theoretically examine why (allegedly) more informed traders like foreigners in an emerging market earn more than their informational advantage would justify. Once they establish a good reputation in the market, they can earn more than they deserve, partly thanks to their reputation. And, surprisingly, they could outperform other informed traders like local institutions even in the absence of any informational advantage. Also, ironically, an extraneous shock to foreigners could also work in favor of them and against locals as long as they keep a good reputation. One implication of these results on investment performances of foreign investors from developed markets is
that their outstanding achievements in emerging markets might be more attributable to locals’ trust in them than their informational advantage.
학회소식
학회소식
[2010년 제 4차] Asymmetric Information or Asymmetric Reputation?
작성자 : 관리자
조회수 : 903
게시일 :
2010-12-09