@article{ART003161231},
author={Cha, Sangkwon and Kim, Jin Tae},
title={The impact of foreign investors on valuation errors},
journal={Asset Management Review},
issn={2288-6672},
year={2024},
volume={12},
number={2},
pages={1-20}
TY - JOUR
AU - Cha, Sangkwon
AU - Kim, Jin Tae
TI - The impact of foreign investors on valuation errors
JO - Asset Management Review
PY - 2024
VL - 12
IS - 2
PB - Institute of Management Research, SungKyunKwan University
SP - 1
EP - 20
SN - 2288-6672
AB - The study aimed to empirically analyze whether there is a relationship between corporate valuation errors and the level of foreign investors' ownership. It sought to investigate whether foreign investors' increasing presence in the capital market affects valuation errors positively or negatively. The research analyzed data spanning from 2011 to 2020 and used the methodology developed by Rhodes-Kropf et al. (2005) to estimate valuation errors.
The key findings of the study indicate that as the ownership stake of foreign investors in a company increases, the valuation errors of individual companies also increase. This suggests that higher levels of foreign ownership are associated with greater inaccuracies in corporate valuations.
Furthermore, the study found that this relationship remained consistent across various factors such as dividend status, audit quality, and market segment (KOSPI or KOSDAQ market). Additionally, imposing limits on foreign ownership to 5% or more did not significantly alter the observed relationship.
These findings have implications for financial authorities responsible for regulating and supervising the capital market. The empirical evidence provided by the study can inform policymakers about the impact of foreign investors on corporate valuation. It may prompt them to consider measures to address any potential negative consequences associated with increasing levels of foreign ownership, such as enhancing transparency or implementing stricter regulatory oversight.
KW - oreign ownership;valuation error;overvaluation
DO -
UR -
ER -
Cha, Sangkwon and Kim, Jin Tae. (2024). The impact of foreign investors on valuation errors. Asset Management Review, 12(2), 1-20.
Cha, Sangkwon and Kim, Jin Tae. 2024, "The impact of foreign investors on valuation errors", Asset Management Review, vol.12, no.2 pp.1-20.
Cha, Sangkwon, Kim, Jin Tae "The impact of foreign investors on valuation errors" Asset Management Review 12.2 pp.1-20 (2024) : 1.
Cha, Sangkwon, Kim, Jin Tae. The impact of foreign investors on valuation errors. 2024; 12(2), 1-20.
Cha, Sangkwon and Kim, Jin Tae. "The impact of foreign investors on valuation errors" Asset Management Review 12, no.2 (2024) : 1-20.
Cha, Sangkwon; Kim, Jin Tae. The impact of foreign investors on valuation errors. Asset Management Review, 12(2), 1-20.
Cha, Sangkwon; Kim, Jin Tae. The impact of foreign investors on valuation errors. Asset Management Review. 2024; 12(2) 1-20.
Cha, Sangkwon, Kim, Jin Tae. The impact of foreign investors on valuation errors. 2024; 12(2), 1-20.
Cha, Sangkwon and Kim, Jin Tae. "The impact of foreign investors on valuation errors" Asset Management Review 12, no.2 (2024) : 1-20.
