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Transparency and International Investor Behavior

Author

Listed:
  • Shang-Jin Wei
  • Mr. Gaston Gelos
Abstract
Does country "transparency" affect international portfolio investment? We examine this and related questions using a unique micro dataset on international portfolio holdings. We employ various indices of government and corporate transparency, focusing on the availability and quality of information. We find that emerging market equity funds hold fewer assets in less transparent countries. Herding among funds is somewhat less prevalent in more transparent countries. During the Asian and Russian crises, emerging market funds withdrew more strongly from less transparent countries after controlling for other risk factors. However, funds tend to react less strongly to news from more opaque markets.

Suggested Citation

  • Shang-Jin Wei & Mr. Gaston Gelos, 2002. "Transparency and International Investor Behavior," IMF Working Papers 2002/174, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2002/174
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