NBER

Jong Kook Shin

415 Fronczak Hall
State University of New York at Buffalo
and Center for Human Capital
Box 601520
Buffalo, NY 14260

E-Mail: EmailAddress: hidden: you can email any NBER-related person as first underscore last at nber dot org
Institutional Affiliation: State University of New York at Buffalo

NBER Working Papers and Publications

January 2010Private Information, Human Capital, and Optimal "Home Bias" in Financial Markets
with Isaac Ehrlich, Yong Yin: w15668
By allowing for imperfectly informed markets and the role of private information, we offer new insights about observed deviations of portfolio concentrations in domestic relative to foreign risky assets, or "home bias", from what standard finance models predict. Our model ascribes the "bias" to endogenous information acquisition bolstered by investors' human capital. We develop discriminating hypotheses about the influence of "specific" and "general" human capital endowments and direct and opportunity costs of managing risky assets in determining whether to hold these assets, and how the assets' portfolio shares vary across investors and financial markets. These hypotheses are supported by numerical and econometric analyses of panel data from the US over 1992-2007, and 23 international fin...

Published: Isaac Ehrlich & Jong Kook Shin & Yong Yin, 2011. "Private Information, Human Capital, and Optimal "Home Bias" in Financial Markets," Journal of Human Capital, University of Chicago Press, vol. 5(3), pages 255 - 301 citation courtesy of

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