• อัจฉรา ชีวะตระกูลกิจ
  • Boondhiva Cheewatragoongit
Keywords: Stock Market Consolidation, Equity Home Bias, Equity Investment


In the last three decades, many stock markets around the world have consolidated their trade platforms or signed agreements to facilitate cross-country investments. The objective of this study is to investigate the effect of stock market consolidation on US equity home bias (HB) using Ordinary Least Square (OLS) panel regression controlling for numerous economic and stock market characteristics.
We distinguish two stages of market consolidation into (i) an announcement stage and (ii) an implementation stage. The samples include 22 stock markets under six stock market consolidation groups during the year 2001-2016. The results suggest that the stock market consolidation is not a significant factor that could reduce US HB towards the consolidation groups that include US markets. However, the stock market consolidation even increases US home bias toward the consolidation groups that exclude US markets implying that US investors are less interested in investing in the equity markets of other groups.
In addition, governance, indirect cost of investment, direct cost of investment, incentive of investment, financial crisis, and size are also important factors that impact HB.


Download data is not yet available.


Ahearne, A.G., Griever, W.L., and Warnock, F.E., 2004. Information costs and home bias: an analysis of US holdings of foreign equities. Journal of international economics, 62(2), pp.313–336.
Anderson, C.W., Fedenia, M., Hirschey, M., and Skiba, H., 2011. Cultural influences on home bias and international diversification by institutional investors. Journal of Banking & Finance, 35(4), pp.916–934.
Baele, L., Pungulescu, C., and Ter Horst, J., 2007. Model uncertainty, financial market integration and the home bias puzzle. Journal of International Money and Finance, 26(4), pp.606–630.
Bekaert, G. and Harvey, C.R., 1995. Time‐varying world market integration. The Journal of Finance, 50(2), pp.403–444.
Bekaert, G. and Wang, X.S., 2009. Home bias revisited. Available at SSRN 1344880.
Chan, K., Covrig, V., and Ng, L., 2005. What determines the domestic bias and foreign bias? Evidence from mutual fund equity allocations worldwide. The journal of finance, 60(3), pp.1495–1534.
Chan, K., Covrig, V., and Ng, L., 2009. Does home bias affect firm value? Evidence from holdings of mutual funds worldwide. Journal of international economics, 78(2), pp.230–241.
Cooper, I. and Kaplanis, E., 1986. Costs to crossborder investment and international equity market equilibrium. Recent Developments in Corporate Finance Cambridge University Press, pp.209–240.
Cooper, I. and Kaplanis, E., 1994. Home bias in equity portfolios, inflation hedging, and international capital market equilibrium. Review of Financial Studies, 7(1), pp.45–60.
Dahlquist, M., Pinkowitz, L., Stulz, R.M., and Williamson, R., 2003. Corporate Governance and the Home Bias. The Journal of Financial and Quantitative Analysis, 38(1), pp.87–110.
Daly, K. and Vo, X.V., 2013. The determinants of home bias puzzle in equity portfolio investment in Australia. International Review of Financial Analysis, 27, pp.34–42.
Fidora, M., Fratzscher, M., and Thimann, C., 2007. Home bias in global bond and equity markets: the role of real exchange rate volatility. Journal of International Money and Finance, 26(4), pp.631–655.
French, K.R. and Poterba, J.M., 1991. Investor Diversification and International Equity Markets. The American Economic Review, 81(2), pp.222–226.
Giofré, M., 2016. Stock exchange consolidation and cross-border investment: an empirical assessment. SSRN Electronic Journal, (October), pp.1–33.
Lau, S.T., Ng, L., and Zhang, B., 2010. The world price of home bias. Journal of Financial Economics, 97(2), pp.191–217.
Leepsa, N.M. and Mishra, C.S., 2016. Theory and Practice of Mergers and Acquisitions: Empirical Evidence from Indian Cases. IIMS Journal of Management Science, 7(2), p.179.
Mishra, A. V., 2008. Australia’s equity home bias. Australian Economic Papers, 47(1), pp.53–73.
Mishra, A. V, 2014. Australia’s home bias and cross border taxation. Global Finance Journal, 25(2), pp.108–123.
Portes, R. and Rey, H., 2005. The determinants of cross-border equity flows. Journal of International Economics, 65(2), pp.269–296.
Sercu, P. and Vanpée, R., 2008. Estimating the Costs of International Equity Investments*. Review of Finance, 12(4), pp.587–634.
Wolfe, M., Stressman, S., and Manfredo, M., 2011. The acquisition of IBP by tyson foods in 2001: Pre- and post-merger financial performance. American Journal of Agricultural Economics, 93(2), pp.642–647.
How to Cite
ชีวะตระกูลกิจอ., & Cheewatragoongit, B. (2021). STOCK MARKET CONSOLIDATION AND US EQUITY HOME BIAS. odern anagement ournal, 19(1), 1-13. etrieved from
Research Articles