TY - BOOK ID - 134264825 TI - Information asymmetries and institutional investor mandates PY - 2011 PB - Washington, D.C., The World Bank, DB - UniCat KW - Debt Markets KW - Emerging Markets KW - Finance and Financial Sector Development KW - International Financial Markets KW - Investment and Investment Climate KW - Microfinance KW - Mutual Fund KW - Mutual Funds KW - Portfolio Choice UR - https://www.unicat.be/uniCat?func=search&query=sysid:134264825 AB - The preference among foreign institutional investors for large firms is widely documented. This paper deepens our understanding of international investments by providing evidence that foreign institutional investors with broader investment scopes prefer to invest in firms where they are less prone to information disadvantages than more specialized ones. In other words, there is heterogeneity in how information asymmetries affect investors' portfolio choices. Theoretically, a model with costly information and short-selling constraints shows that the broader the investor's mandate, the smaller the incentives to gather and process costly information. Empirically, an analysis of the mutual fund industry in the United States supports this hypothesis. ER -