Gains from Portfolio Diversification into Less Developed Countries' Securities: A Reply

Given the nature of James Bicksler's comment, it would be appropriate first to review briefly the most important works in the area of international portfolio investments.© 1978 JIBS. Journal of International Business Studies (1978) 9, 117–123

Gains from Portfolio Diversification into Less Developed Countries’ Securities

This paper substantiates the intuitive argument for international portfolio diversification—diversification that is not limited to the developed markets, but also includes the corporate securities of less developed countries (LDCs). Such diversification, in light of all available evidence, appears to be desirable from the standpoint of the investor.Capital flows resulting from international diversification can tremendously improve liquidity position of the developing countries and provide a major development impact by increasing the probability of success of the capital market development programs being pursued by many LDCs, e.g., Brazil, Venezuela, Colombia, Indonesia, Nigeria, and Korea.© 1977 JIBS. Journal of International Business Studies (1977) 8, 83–100

Financing MNC Subsidiaries in Central America

This articles studies the historical financial sources for MNC activity in Costa Rica, Honduras, and Nicaragua. The evidence suggests that country environment factors have dominated the sourcing policies of MNCs. The most important factors include perceived exchange risk and domestic credit conditions.© 1979 JIBS. Journal of International Business Studies (1979) 10, 75–86

Market Segmentation and the Cost of Capital in International Equity Markets

While theoretical models predict a decrease in the cost of capital from depositary receipt offerings, the economic benefits of this liberalization have been difficult to quantify. Using a sample of 126 firms from 32 countries, we document a significant decline in the cost of capital of 42 percent. In addition, we show the decline is driven by the ability of U.S. investors to span the foreign security prior to cross-listing. Our findings support the hypothesis that financial market liberalizations have significant economic benefits