trying to explain home bias in equities and consumption investors hold a substantially larger proportion of their wealth portfolios in domestic assets than standard portfolio theory would suggest a phenomenon called equity home bias in the absence of this bias investors would optimally diversify domestic output risk using foreign equities therefore consumption growth rates would tend to co move across countries even when output growth rates do not empirically however consumption growth rates tend to have a lower correlation across countries than do output growth rates a phenomenon i call consumption home bias in this paper i discuss these two biases and their potential relationship as suggested by the literature

the impact of foreign board membership on firm value abstract this study examines the effect of foreign anglo american board membership on corporate performance measured in terms of firm value tobin s q using a sample of firms with headquarters in norway or sweden the study indicates a significantly higher value for firms that have outsider anglo american board member s after a variety of firm specific and corporate governance related factors have been controlled for we argue that this superior performance reflects the fact that these companies have successfully broken away from a partly segmented domestic capital market by importing an anglo american corporate governance system such an import signals a willingness on the part of the firm to expose itself to improved corporate governance and enhances its reputation in the financial market

home bias in equity portfolios inflation hedging and international capital market equilibrium we test whether the home bias in equity portfolios is caused by investors trying to hedge inflation risk the empirical evidence is consistent with this motive only if investors have very high levels of risk tolerance and equity returns are negatively correlated with domestic inflation we then develop a model of international portfolio choice and equity market equilibrium that integrates inflation risk and deadweight costs using this model we estimate the levels of costs required to generate the observed home bias in portfolios consistent with different levels of risk aversion for a level of risk aversion consistent with standard estimates of the domestic equity market risk premium these costs are about a few percent per annum greater than observable costs such as withholding taxes thus the home bias cannot be explained by either inflation hedging or direct observable costs of international investment unless investors have very low levels of risk aversion article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

foreign investors and corporate social responsibility evidence from the career advancement of women in japan i examine whether foreign investors invest in firms that encourage the career advancement of women by using data from a sample of japanese firms during the period 2008 2011 first i find that corporate governance reform and work life balance practices facilitate the promotion of women to higher positions in firms furthermore i find that foreign investors hold more shares of firms that encourage the career advancement of women overall these results indicate that the career advancement of women as a part of corporate social responsible activities benefits foreign investors

agglomeration and competitiveness from marshall to chinitz chinitz like marshall is better known as a seminal theorist of the urban supply side than for his useful insights on continental economic regeneration this paper draws on both themes in chinitz s work assuming that the us trade deficit is a fiscal outcome the question remains as to why some us industries flourish while others fail the literature since 1988 emphasises the role of urban industrial clusters in nurturing globally competitive industries but route 128 s fall suggests limits to this view the alternative theme is that continentality 1 provides a menu of economic cultures and 2 generates feedback to demature declining older regions enter europe s 1992 more generally world development in the 1990s is seen as being led by three continental systems including east asia and operating via the dance of continents and regions now the primal economic constructs

impatience incentives and obesity this paper explores the relationship between time preferences economic incentives and body mass index bmi using data from the 2006 national longitudinal survey of youth we rst show that greater impatience increases bmi and the likelihood of obesity even after controlling for demographic human capital occupational and nancial characteristics as well as risk preference next we provide evidence of an interaction

on the effects of barriers to international investment a simple model is presented in which it is costly for domestic investors to hold foreign assets the implications of the model for the composition of optimal portfolios at home and abroad are derived it is shown that all foreign assets with a beta larger than some beta plot on either one of two security market lines some foreign assets with a beta smaller than are not held by domestic investors even if their expected return is increased slightly while it is obviously not true that asset markets are completely segmented between countries there is evidence of barriers to international investment although reality seems to lie in that grey area between complete segmentation and no segmentation at all most international asset pricing models are concerned with the extreme case of no barriers to international investment no effort seems to have been made to study the effect on portfolio choice of such barriers which make it costly to hold foreign securities as opposed to domestic securities but which do not in general render international diversification so onerous that investors avoid foreign securities completely casual empiricism suggests that models without barriers to international investment should be suspect those models cannot explain why it appears that in every country investors on average hold more domestic securities than would be required if they held the world market portfolio 2 this paper constructs a model of international asset pricing in which there is a cost associated with holding either long or short risky foreign securities for the sake of simplicity in most of the paper we assume that while domestic investors face barriers to international investment foreign investors face no such barriers it turns out that nothing significant is lost with such an assumption the main conclusions of this paper for the case in which foreign investors face no barriers to international investment are 1 in the presence of barriers to international investment some risky foreign

an evaluation of competitive industrial structure and regional manufacturing employment change drucker j an evaluation of competitive industrial structure and regional manufacturing employment change regional studies this paper examines the relationship between regional industrial structure and employment change in the manufacturing sector and nineteen subsectors in the united states from 1987 to 1997 the relative associations of economic diversity industrial specialization and competitive structure with economic performance are assessed using a non causal regression framework multiple facets of industrial structure at the regional scale including competitive structure are considered together by exploiting confidential microdata to construct and evaluate detailed metrics across broad geographic and industrial ranges the findings suggest the importance of industrial competitive structure for understanding regional employment change economic performance and industrial development

the relationship between smoking quitting smoking and obesity in australia a seemingly unrelated probit approach smoking and obesity are two leading causes of preventable death further understanding of the relationship between these two risk factors can assist in reducing avoidable morbidity and mortality this study investigates the empirical association between obesity and the propensity to smoke and to quit smoking using a seemingly unrelated sur probit approach that takes into consideration the potential for reverse causality and unobserved heterogeneity using australian health survey data this article demonstrates the usefulness of the sur probit approach in generating information on the relationship between unobserved factors influencing both smoking behaviour and obesity and in providing estimates of the conditional probabilities of each risk factor results suggest the two risk factors are not independent the presence size and direction of correlation between the unobserved factors are found to vary by smoking behaviour and by gender estimates of conditional probabilities demonstrate smokers have a

equity home bias and corporate disclosure abstract i show that more comprehensive corporate disclosure reduces investors uncertainty about domestic companies payoffs at no cost thereby decreasing investors equity home bias toward a country since investors should base their investment decisions on valid and easily interpretable company information only more comprehensive disclosure will reduce the home bias only if domestic securities law is sufficiently stratified and domestic companies use international accounting standards using panel data for 38 countries from 2003 to 2008 i find that more comprehensive disclosure reduces investors home bias though significantly only for countries that sufficiently enforce their securities law and implement international accounting standards

foreign institutional investment is governance quality at home important abstract this paper examines the investment preferences of foreign institutional investors investing in the u s market we analyse both firm and country level determinants that influence the foreign institutional investors allocation choices at the country level we find that the governance quality in a foreign institutional investor s home country is a determinant of their decision to invest in the u s market our findings indicate that investors who come from countries with governance setups similar to that of the u s invest more in the united states the investment levels though are more pronounced for countries with governance setups just below that of the u s our results are consistent with both the flight to quality and familiarity arguments and help reconcile prior contradictory empirical evidence at the firm level we present unequivocal evidence in favour of the familiarity argument foreign institutional investors domiciled in countries with high governance quality prefer to invest in u s firms with high corporate governance quality this effect is primarily driven by grey non monitoring institutional investors

confidence in the familiar an international perspective one striking feature of intemrnational portfolio investment is the extent to which equity portfolios are concentrated in the domestic equity market of the investor the home bias puzzle i examine the role of investors perception of foreign investment risk on their portfolio choices the expected retumrns and risk of foreign investment are specified through an asset pricing model with the home portfolio being the benchmark asset pastor s 2000 domestic capm the model serves as a reference point around which investors can center their prior beliefs i focus on investors prior beliefs that are consistent with the literature on confidence in the familiar foreign equities in terms of both expected returns and risk being viewed less favorably than domestic equities these prior beliefs are then combined with the data on g7 equities and the revised beliefs are used to obtain the global optimal asset allocation to hold predominantly domestic equities each g7 investor has to believe that the risk of foreign investment is several times higher than the actual risk the home bias is more of a puzzle for a u s investor during the 1970s specifying investors prior beliefs around the world capm does not help resolve the puzzle

long waves and uneven regional growth in recent years the phenomenon of uneven economic growth between different regions of the country has received increasing attention in the academic literature 16 17 20 27 the conventional explanation of uneven growth centers on disparities between regions in such things as unionization labor costs local taxes energy costs climate extent of local government regulation the availability of technology and access to markets the purpose of the present paper is to suggest that uneven regional development is a manifestation of regional long waves of economic growth and decline and that disparities between regions in such things as unionization labor costs and taxes are simply the result of different regions being at different phases of development in their respective long waves the essence of the view to be presented in the following pages is that regions experience long periods of sustained rapid economic growth followed by relatively lengthy periods of slow economic growth or economic decline the growth retardation stage of the long wave sets up the conditions for an eventual economic recovery and a return to a more rapid rate of growth the first section of the paper will be devoted to presenting the theoretical underpinnings of regional long waves supporting empirical evidence will be provided in the second section

can changing economic factors explain the rise in obesity a growing literature examines the effects of economic variables on obesity typically focusing on only one or a few factors at a time we build a more comprehensive economic model of body weight combining the 1990 2010 behavioral risk factor surveillance system with 27 state level variables related to general economic conditions labor supply and the monetary or time costs of calorie intake physical activity and cigarette smoking controlling for demographic characteristics and state and year fixed effects changes in these economic variables collectively explain 37 of the rise in body mass index bmi 43 of the rise in obesity and 59 of the rise in class ii iii obesity quantile regressions also point to large effects among the heaviest individuals with half the rise in the 90th percentile of bmi explained by economic factors variables related to calorie intake particularly restaurant and supercenter warehouse club densities are the primary drivers of the results

reply to jonathan gruber and michael frakes we address gruber and frakes s criticisms that 1 the state excise tax on a package of cigarettes is a more exogenous measure of the cost of cigarettes than the state specific price of a package of cigarettes and 2 that it is preferable to control for the effects of unmeasured variables that vary over time with the use of time dummies instead of with a quadratic time trend we also point out that our specification of the cost effect differs from theirs because we allow it to be nonlinear while they force it to be linear

have efforts to reduce smoking really contributed to the obesity epidemic i introduction two of the most notable trends in public health over the past 30 yr are the reductions in smoking rates and the rapid increase in obesity rates based on data from the national health interview survey the smoking rate among adult americans was roughly 37 in the early 1970s and is 21 today a reduction of more than 40 in contrast the adult obesity rate increased 135 from 14 in the early 1970s to 32 2 in 2004 national health and nutrition examination survey nhanes 71 04 figure 1 because the medical literature has shown that smoking cessation is associated with weight gain these trends have given rise to a puzzling question have efforts to reduce smoking rates in the united states inadvertently caused increases in rates of obesity there is substantial evidence that at least in the short term smoking and obesity are not independent klesges and shumaker 1992 found that reductions in smoking and or quitting altogether is associated with increases in dietary intake as well as metabolic changes that promote weight gain as a result weight gain is often an unwanted side effect of quitting smoking the 1990 surgeon general s report the health benefits of smoking cessation concluded that the average weight gain after smoking cessation was about 5 pounds or 2 3 kg u s department of health and human services 1990 however there is additional evidence that this increase may be short lived mizoue et al 1998 found that given enough time the weight of former smokers inevitably returns to that of never smokers as a result the long term impact on weight of efforts to reduce smoking rates may be negligible figure 1 omitted to date three articles have attempted to quantify what proportion of the increase in obesity rates over the past several decades is caused by efforts to reduce smoking chou grossman and saffer 2004 used repeated cross sections from 1984 to 1999 behavioral risk factor surveillance system brfss data to estimate the impact of several state level measures on body mass index bmi and on the probability of being obese including increases in state level cigarette prices figure 1 the results of this study suggest that increases in cigarette prices may be responsible for as much as 20 of the increase in bmi and trends in obesity rates over this period this finding is used to argue that rising obesity rates are an unintended consequence of the success of the antismoking movement gruber and frakes 2006 extended the models presented in chou grossman and saffer 2004 using the same data set they examined the relationship between cigarette taxes and body weight and argue that cigarette taxes are a more appropriate measure than prices because price changes may be driven by market factors that affect the rates of smoking and eating their specification also includes several other differences including controls for state and year effects gruber and frakes found that cigarette taxes are negatively associated with body weight suggesting that increases in cigarette taxes result in reductions in bmi this result is in direct contrast with the findings of chou grossman and saffer however not even the authors find their result plausible p 196 flegal 2007 presents yet another analysis of the link between smoking and obesity using nhanes data the author models the contemporaneous relationship between smoking and weight and then reestimates the current prevalence of obesity under the assumption that past smoking levels had remained unchanged using this approach she concludes that decreases in the prevalence of cigarette smoking had only a small effect less than 1 percentage point on the overall prevalence of obesity in this article we revisit the analyses presented by chou grossman and saffer and gruber and frakes to explain the dichotomy of results and provide further evidence of the relationship between antismoking efforts and increases in bmi

cigarette taxes and illicit trade in europe cigarettes are highly taxed in europe but at higher prices some consumers substitute more toward illicit cigarettes the illicit retail trade in cigarettes irtc includes counterfeit untaxed and smuggled cigarettes some existing literature includes claims that taxes are not an important determinant of irtc using data from the european union we find the opposite raising prices leads to substantial increases in irtc a 1 increase in tax pack is expected to increase illicit market share by 5 to 12 percentage points and increase illicit cigarette sales by 29 to 95 the results are robust to alternative specifications and data jel i18 h26 k42

supersizing supercenters the impact of walmart supercenters on body mass index and obesity abstract researchers have linked the rise in obesity to technological progress reducing the opportunity cost of food consumption and increasing the opportunity cost of physical activity we examine this hypothesis in the context of walmart supercenters whose advancements in retail logistics have translated to substantial reductions in the prices of food and other consumer goods using data from the behavioral risk factor surveillance system matched with walmart supercenter entry dates and locations we examine the effects of supercenters on body mass index bmi and obesity we account for the endogeneity of walmart supercenter locations with an instrumental variables approach that exploits the unique geographical pattern of supercenter expansion around walmart s headquarters in bentonville arkansas an additional supercenter per 100 000 residents increases average bmi by 0 24 units and the obesity rate by 2 3 points these results imply that the proliferation of walmart supercenters explains 10 5 of the rise in obesity since the late 1980s but the resulting increase in medical expenditures offsets only a small portion of consumers savings from shopping at supercenters

the determinants of international investment and attention allocation using internet search query data abstract this paper explores the joint determination of home bias and attention allocation we overcome the typical challenge associated with evaluating attention allocation theories by using a new internet search query dataset to measure how much information investors decide to process employing an instrumental variables approach we find empirical evidence of a two way causality between home bias and attention our estimates suggest that if all countries were to receive the same level of attention as the u s then the average home bias by u s investors would fall from 85 2 to 57 3

welfare enhancing technological change and the growth of obesity the theory explores how technological change can produce obesity as an unintended consequence of economic development which reduces food prices and the strenuousness of work the empirical analysis presents a specific example of how food price declines can improve health and well being even in a developed country

the effects of legal reforms on the ownership structure of listed companies a general view in the corporate governance literature is that corporate ownership structures are rather stable in time and change slowly however even if changes in ownership structures are difficult due to path dependence anecdotal evidence indicates that some sort of transition towards the us style corporate ownership could be occurring in civil law countries the aim of this article is to test the so called law and finance view which predicts that this convergence will only happen if the appropriate regulatory framework is in place we test this prediction using longitudinal data from italian listed companies assessing the effects of recent legal reforms our results show that an increase in the protection of investors rights is associated with a lower use of control enhancing mechanisms and a lower separation of control and cash flow rights while it is less evident if it is associated with a more dispersed ownership these findings carry important implications for theory and practice

direct foreign ownership institutional investors and firm characteristics in this paper we characterize foreign ownership using a dataset of ownership and attributes of swedish rms the analysis reveals that foreigners show a preference for large rms rms paying low dividends and rms with large cash positions on their balance sheets when we further analyze the preference for large rms we nd that market liquidity and presence in international markets measured through export sales or listings on other exchanges seem to characterize foreign holdings better than rm size alone foreigners also tend to underweight rms with a dominant owner importantly we demonstrate that most of the features associated with foreign ownership are driven by the fact that foreign investors typically are mutual funds or other institutional investors hence we identify an institutional investor bias rather than a foreign investor bias finally using ownership data on a country level we conclude that the results are particularly strong among u s investors who comprise the largest institutions among foreign investors 2001 elsevier science s a all rights reserved jel classixcation g1 g15