In this paper, we provide a different perspective on the home bias puzzle. Combining the resources of Datastream, Dun and Bradstreet’s Who Owns Whom, and Worldscope, we construct a sample of 1,143 firms from the G7 countries: Canada, France, Germany, Italy, Japan, the UK and the US. Our sample comprises the constituent firms of these countries’ main stock indexes for which we have the full set of data. We measure firm-level and market performance using daily returns from January 1999 to June 2007. We classify the degree of multinationality of these firms’ operations from the geographical spread of their sales and subsidiaries as either domestic (D), regional (R), trans-regional (T) or global (G). Our analysis yields several novel findings. First, we show that the greater the firm’s international reach, the more diversification benefits it can provide. Abstracting from country effects, firms that are more internationalised in their activities tend to provide greater diversification benefits to investors in every country in our sample. Second, we show that investors in each country can gain international diversification without having to invest in foreign-based firms. By investing in internationalised firms listed in their home countries, investors can ‘free ride’ the costs and risks associated with internationalisation at the level of the firm. We suggest that the contradictory findings in prior studies of this issue may be due to inconsistent definitions of ‘multinational’ or ‘international’ firms. When differences in firm-level internationalisation are carefully considered, it is clear that investors can benefit from international diversification while exhibiting ‘home bias’.
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There is an increased trend towards international financial integration as countries are removing and relaxing controls on cross-border investment. The potential benefits of international diversification have been acknowledged theoretically. Many papers suggest that the risk of an investment portfolio can be reduced by incorporating foreign equities (De Santis & Gerard 1997; Eldor, Pines & Schwartz 1988; Grauer & Hakansson 1987; Grubel 1968; Solnik 1974; Stulz 1997). However, despite well documented gains from international diversification, investors continue to have a strong preference for domestic assets. Various empirical studies challenge the assumption of international diversification yielding high returns. This phenomenon is dubbed as the home bias puzzle by financial economists, ie. actual share of foreign equity in equity portfolio is normally lower than predicted by a capital asset pricing model. Engel (2000) identifies that home bias in equity portfolio is one of the three “core puzzles” in international macroeconomics (why is so little diversification observed?).
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The literature on home bias revolves around different motives of investors, including information asymmetries, behavioural biases, hedging motives and explicit barriers to international investment. Several research papers have considered the effect of indirect barriers, such as information asymmetries, on equity investment and home bias. French and Poterba (1991) use a simple model of investor preferences and behaviour to show that current portfolio patterns imply that investors in each nation expect returns in their domestic equity market to be several hundred basis points higher than returns in other markets. Tesar and Werner (1995) state that first, there is a strong evidence of a home bias in national investment portfolios despite the potential gains from international diversification. Coval and Moskowitz (1999) state that portfolios of domestic stocks exhibit a preference of investing close to home. Huberman (2001) states that shareholders of a Regional Bell Operating Company (RBOC) tend to live in the a rea which it serves, and an RBOC’s customers tend to hold its shares rather than other RBOCs’ equity. People invest in the familiar while often ignoring the
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Home Bias means that investors tend to overweight domestic assets in their portfolio, while this might not be optimal from a diversification point of view. International diversification should generate a better risk/return profile than domestic diversification, as the world capital market entails lower systematic risk than any domestic capital market. In a model-based approach, one can use the optimal portfolio weights from an international asset-pricing model as benchmark weights to compare with actual portfolio holdings. The ICAPM assumes that every investor is of the mean-variance type and has the same beliefs about the distribution of real asset returns. All investors face identical investment opportunities and there are no transaction costs or taxes. Inflation is independent of asset re turns (or zero) and there is no exchange rate risk. These assumptions result in the well-known relationship:
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The ICAPM suggests that to maximize risk adjusted returns, investors should hold equities from countries around the world in proportion to their market capitalisation. Table 1 compares the actual share of domestic equities in the home portfolio with the benchmark share in the world portfolio as per the ICAPM model. Column (1) of Table 1 shows strong preference for domestic equities. For instance, the actual domestic equity holding of Australia in 2002 was 78.08 %. Column (2) of Table 1 indicates the share of each country in the world market portfolio as predicted by ICAPM; under the assumptions of complete global capital markets, where there are no barriers to international investment. The benchmark equity holding of Australia in 2002 was 1.84 %. The actual percentage of domestic equity holdings is much greater than the benchmark percentage as computed from the ICAPM and investors’ portfolios are heavily biased towards domestic equities. This differential is very high and investors around the globe have a bias towards domestic securities. The situation where investors hold far too high a share of their wealth in domestic securities compared with the optimal share predicted by the traditional theory of portfolio choice is termed as the ‘home bias puzzle’.
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The empirical investigation into the home bias puzzle is important for several reasons. First, one of the major problems in the research on home bias has been relatively poor quality of data on cross border holdings. In the past, the cross border holdings were estimated using accumulated capital flows and valuation adjustments (Tesar and Werner (1995)). Warnock and Cleaver (2002) show that capital flows data are ill suited to estimate bilateral holdings. This paper contributes to the existing literature by employing the International Monetary Fund’s (IMF’s) Coordinated Portfolio Investment Survey (CPIS) dataset on bilateral equity holdings for the years 2001 to 2005. CPIS reports data on foreign portfolio asset holdings (divided into equity, long term debt, and short term debt) by residence of issuer. In 1997, IMF conducted the first CPIS wherein 29 countries participated; the next survey was conducted in 2001 wherein 69 countries participated and now CPIS is being conducted on an annual basis.
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The so-called consumption home bias puzzle refers to a tendency of consumers preferring domestic goods in the real world, but such phenomenon happened in the goods market cannot be explained by researchers. Regarding to the study in the topic of consumption home bias, mostly of them concentrated in the early exploration of the causes of consumption home bias, such as trade costs (Obstfeld and Rogoff, 2000; Ried, 2009) country size and degree of openness (Sutherland, 2005; De Paoli, 2009) non-traded goods (Stockman and Dellas, 1989; Pesenti and Van Wincoop, 2002) and trade in intermediate input factors (Hillberry and Hummels, 2002) which are all main causes of consumption home bias that scholars believed. More recent studies have focused on the discussion of the effects of consumption home bias, such as Pierdzioch (2004) analyzed the effects of monetary shock under different extent of consumption home bias and capital mobility, Hau (2002); Pitterle and Steffen (2004); Kollmann (2004); Sutherland (2005); Leith and Lewis (2006) and Cooke (2010) investigated the effect of consumption home bias on fluctuation of exchange rate, De Paoli (2009) discussed the welfare effects of consumption home bias and monetary policy. In addition, it is worthy to mention that the effect of consumption home bias on the optimal monetary policy is also a quite hot topic recently, which including researches made by Faia and Monacelli (2006); Jondeau and Sahuc (2008); Galí and Monacelli (2008) and Wang (2010). Evidently, although researches related with the topic of consumption home bias were quite enthusiastic, however, none of literature has been able to explain clearly the role of consumption home bias plays on the effects of tariff shock, which is the motivation to drive researches.
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of accurate holdings data, researchers have greatly underestimated foreign portfolio positions, which greatly hampered the analysis of home bias. This paper fills the gap by employing the recent International Monetary Fund’s (IMF’s) Coordinated Portfolio Investment Survey (CPIS) dataset on bilateral equity holdings. Fifth, country specific studies on home bias, are either limited to US foreign equity holdings or focus on countries’ foreign equity holdings not subdivided into country pairs. There are no studies focussing on portfolio equity home bias in the Australian context. This paper fills in the gap by empirically investigating the phenomenon of home bias in the Australian context, using high quality IMF dataset. This paper empirically investigates the home bias puzzle by analysing the role of direct barriers to investment viz. capital controls and transaction costs; indirect barriers based on information asymmetries including legal barriers; and control variables viz. trade links.
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Client puzzles approaches have been proposed by several researchers so as to avoid denial of service attacks. For example Juels and Brainard in  applied client puzzles to TCP SYN flooding, where they mention that also SSL encloses a parallel problem. In this paper, the authors proposed a crypto- graphically based countermeasure against connection depletion attacks. Connection depletion is a denial-of-service attack in which an attacker seeks to initiate and leave unresolved a large amount of connection requests to a server, exhausting its resources and rendering it unable to serve valid requests. TCP SYN flooding is a well-known example of such an attack. They introduced a countermeasure (a client puzzle protocol) which the basic scheme was as follows: When a server comes under attack, it distributes small cryptographic puzzles to clients making service requests. To complete its request, a client must solve its puzzle correctly.
network, interpersonal trust, or social norms of reciprocity and trustworthiness. If social capital is defined as social network, social capital can be accumulated through participation in community and voluntary activities (Putnam, 2000). This view can be explained formally by the simple investment theory (Glaeser et al ., 2002). From a regional viewpoint, empirical analysis has been used to explore how social capital is formed based on the decision making of individuals; the suggestion is that home-owners are less likely to move from their current residences, and therefore are more inclined to invest in their local social capital (DiPasquale and Glaeser 1999; Hilber 2007).
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The main puzzle or photos divided into completely different items and keep as image. within the registration form web service user presents the details start importing the image and arrange the image block in rows and columns. consequent step is to initiate drag and drop of image block enraptured from drag supply to drop target. The web service user moves image block from drag supply to drop target to
ABSTRACT: Denial-of-service (DoS) and Distributed DoS (DDoS) are among the major threats to cyber-security and Internet of Things (IoT). Web services architecture are vulnerable to DoS/DDoS attacks where the attacker creates a huge whole sum of traffic and forces it to the server, Which induces significant harm to the victim server. These attacks are typical explicit and intentional attempts to disrupt legitimate user’s access to services. Client puzzles are well known defense to these attacks, which demands a client to perform computationally expensive operations before being granted services from a server. However, an attacker can use their GPU to solve the puzzle and weaken the effectiveness of puzzle because existing client puzzle schemes publish their puzzle algorithms in advance. So in the proposed model a puzzle algorithm in the present dynamic puzzle scheme is randomly generated only after a client request is received at the server side and the algorithm is generated such that an attacker is unable to prepare an implementation to solve the puzzle in advance and the instructions in the puzzle can only be solved by the CPU. Further by blocking clients who try to execute the attack by sending wrong solution to the requested puzzle defends the DoS attacks.
An assumption of both kernel analyses and parametric approaches is that data points are independent. How- ever, animal locations are collected sequentially, and the extent to which the assumption of independence is vio- lated is a function of sampling rate . Sampling rates are rapidly increasing with newer telemetry technologies, such as those based on global positioning systems . Little information is currently available on how auto- correlation interacts with estimation choices in kernel analyses to bias resulting estimates. Moreover, the ability to assess bias and hence performance of different kernel techniques is ultimately dependent on defining the true home range of an animal, an issue that has not received much attention.
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Moreover, from the …rst-stage results in Table 3, one can observe that the estimated coe¢cient on initial real GDP per worker is insigni…cant. This actually means that having better initial conditions (like being richer and having better infrastructure) would not bring more …nancial deregulation policies. In contrast, the estimated coe¢cient on physical capital investment rate is signi…cant at the 1% level. This is not surprising given that Chinese investment was mainly conducted by the state sectors. Therefore, political factors, rather than e¢ciency motives, may drive the physical capital investment of the provinces (see also Cull and Xu, 2003; Wei and Wang, 1997). Since both physical capital investment and …nancial deregulation are conducted on a political logic, the signi…cant e¤ect of physical capital investment rate on …nancial deregulation may be due to omitting other important political factors that are unrelated with our home-bias political variables. The second stage results of LIML estimation are presented in Table 4. The endogeneity test always yields a p-value below 5%, showing strong evidence of the endogeneity of …nancial deregulation indicators.
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The proposed method increases the overhead for both parties. On the sender side, there is no big impact because it only needs threshold function calculation and comparison between the threshold function and the hash iterations. However, the mechanism of puzzle strength transmission increases the storage and computation overhead on the receiver side. The index value (16 bits) and previous puzzle strength (4 bits) need to be stored, and there is the additional computation of the L hash and the (3.L + 1) sum operation. This operation is needed to check whether hashing the sum of the index, previous and current puzzle strength values matches the received tag. The node sensor has to check this starting from maximum puzzle strength down to one. The computation and storage addition is still acceptable.
Ever since the breakthrough of AlexNet in the imagenet challenge, CNN’s have become one of the most prominent algorithms in image classification problems. However, just classifying whether or not the image contains a Sudoku puzzle is not enough. The bounding box of the Sudoku puzzle has to be identified and inorder to do so, we used Object Localisation . The reason for not using other algorithms such as Selective Search , YOLO  or Region Proposals  for finding the bounding box is, all these algorithms are computation- ally expensive when compared to Object Localisation. This is another important performance criteria as the number of frames per second has to be taken into consideration for a better AR experience, as the computation increases the number of frames per second decreases. Moreover, these algorithms are very effective when detecting multiple objects in a frame and undergo additional computation, such as in the case of selective search a support vector machine is trained to find the
an initial state with a low degree of matter-gravity entanglement will, because of matter-gravity interaction, get more entangled, plausibly monotonically, as time increases. At least the question of whether the second law holds becomes a question which, in principle, can be answered mathematically once we spec- ify the (low-energy) quantum gravity Hamiltonian (i.e. the generator of the unitary time-evolution) and the initial state. What we have called the second law puzzle would then be resolved because once we define entropy as matter- gravity entanglement entropy (rather than as the von Neumann entropy of the total state) there is no conflict between its increase and a unitary time- evolution.
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staying in Malaysia for a long time. This is similar to the findings of Qian (2008) in New Zealand inasmuch as immigrants who have been staying in this country for a long time have adjusted to the local culture. This does not necessarily mean that immigrant workers who do not have any significant effect on imports are not able to consume their home country products at all. This is indicated by the increase in imported foods from Indonesia from 2005 to 2009 (Table 3). Many Malaysians also buy various products from Indonesia via shopping tourism rather than via formal international trade.
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On the one hand, the potential existence of the phenomenon of home bias is questioned. International tax accords and removal of foreign exchange controls have been abolished (Daly & Xuan, 2013). If explicit barriers had been an impediment to international investment, together with their disappearing home bias should also disappear. Specially, for investors which experience low transaction costs on financial markets, in particular institutional investors such as pension funds. Empirical research shows that with international capital market liberalization the deviations between the value of equities on domestic markets relative to international markets decline (Lewis, 1999). Covring, Defond & Hung (2007) found evidence that international investment was enhanced and home bias reduced in the European Union with the adoption of International Accounting Standards (IAS) in 2005. Intriguingly, Bekaert & Urias (1996) and Gorman & Jorgensen (1996) suggest that there is no home bias. They state that foreign diversification does not give a statistically significant improvement in portfolio performance. Their studies involve uncertainty in the optimal choice of foreign security holdings. They report that simple comparison of historical means and variances of domestic and foreign stocks returns indicate that investors should invest major part of their wealth in foreign stocks. These computations however do not include the uncertainty of the estimates of means and variances. The authors state that when this uncertainty is taken into account there is not much difference in the performance of portfolios with foreign investments and portfolios with domestics stocks alone.
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Our objectives in this paper are to empirically analyze the relevant economic factors at play behind the switch from home bias to Euro bias over the periods 1997 and 2001-2007. In so doing, we run bilateral panel regressions comprising 24 OECD countries using a number of variables that are often used in the literature in analyzing the spatial pattern of international portfolio holdings. 7 Next, we examine the implications of rising intra-Euro area investment holdings separately on Euro bond markets and on Euro equity markets. A particular feature of this segment of the analysis is the use of more recent observations (i.e. 1997-2009), which allow us to examine the impact of the recent financial turmoil on the Euro area’s financial markets. We wanted to find out in what ways Euro area bond and equity markets have evolved following the transition from home bias to Euro bias.
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