Journal of International Business Studies

, Volume 41, Issue 6, pp 960–979

Home bias in foreign investment decisions


DOI: 10.1057/jibs.2009.48

Cite this article as:
Ke, D., Ng, L. & Wang, Q. J Int Bus Stud (2010) 41: 960. doi:10.1057/jibs.2009.48


We analyze the US equity holdings of more than 3000 non-US-based mutual funds from 22 countries and find robust evidence that fund managers strongly prefer to invest in stocks of US firms that have presence in their home country. This “home bias” is independent of the degree of global involvement and visibility of these US firms. While these firms have significantly greater exposure to local equity markets, their local presence offers little information advantage to local fund managers. Our findings suggest that the lack of international diversification is more serious than currently documented in the literature.


logistic regressionforeign portfolio investmentmutual funds

Copyright information

© Academy of International Business 2010

Authors and Affiliations

  1. 1.Department of Economics and Finance, College of Business and Public Administration, Kean UniversityUnionUSA
  2. 2.School of Business Administration, University of Wisconsin-MilwaukeeMilwaukeeUSA
  3. 3.College of Management, Georgia Institute of TechnologyAtlantaUSA