They thank an anonymous referee and the editor for many valuable comments which improve the paper greatly.
Foreign and Local Institutional Ownership and the Speed of Price Adjustment
Version of Record online: 2 JUL 2007
Journal of Business Finance & Accounting
Volume 34, Issue 9-10, pages 1569–1595, November/December 2007
How to Cite
Park, Y. K. and Chung, K. H. (2007), Foreign and Local Institutional Ownership and the Speed of Price Adjustment. Journal of Business Finance & Accounting, 34: 1569–1595. doi: 10.1111/j.1468-5957.2007.02040.x
- Issue online: 2 JUL 2007
- Version of Record online: 2 JUL 2007
- (Paper received May 2006, revised version accepted March 2007)
- foreign ownership;
- institutional ownership;
- speed of price adjustment;
- local investors
Abstract: This paper examines the relation between the speed of price adjustment and stock ownership by foreign and local institutional investors using data from the Korean stock market. We show that returns of stocks with high foreign institutional ownership lead returns of stocks with low foreign institutional ownership, especially after foreign ownership restriction is lifted. Likewise, returns of stocks with high local institutional ownership lead returns of stocks with low local institutional ownership. These results support the idea that foreign institutional (local institutional) investors have faster access to or processing power of new information than local institutional (local individual) investors.