Do Foreign Purchases of U.S. Stocks Help the U.S. Stocks Market?

Date

2009

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Abstract

This paper investigates the relationship between the U.S. S&P 500 stock market and purchases of U.S. corporation stocks by foreign investors. Estimations using monthly data from 1978:1 to 2008:7 under various methodologies show that, controlling for asset prices (interest rates and the yield curve) and inflation, purchases of U.S. stocks by foreign investors have a positive and statistically significant impact on the U.S. stock market performance. We also show that their relationship is time variant. In a global world, the demand-side variable captured by the foreign appetite for U.S. stocks attenuates the negative effects associated with the domestic forces.

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Citation

Lizardo R. A., & Mollick, A. V. (2009). Do foreign purchases of U.S. Stocks help the U.S. stocks market? Journal of International Financial Markets, Institutions and Money, 19(5), 969-986. https://doi.org/10.1016/j.intfin.2009.08.002

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https://doi.org/10.1016/j.intfin.2009.08.002
 http://hdl.handle.net/20.500.12521/259

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Peer-reviewed Journal Articles