7/31/2013 1:08 PM
In Home Bias: An Academic Puzzle (1), Karolyi examines the curious phenomenon that – not unlike the well-documented “Home Bias” in portfolio asset allocation – empirical studies of non-US markets are underrepresented relative to their economic importance within top finance journals. There is also apparently a “foreign bias” in which certain markets – Canada, Mexico and China for instance – are over-represented.
During the last 20 years, 23% of empirical studies published in the top 14 finance journals and 16% of those published in the top 4 are about non-US markets. Relative to the fraction of world GDP that non-US economies comprise, internationally-focused papers are underrepresented by 39% and 45% in the top 14 and 4 finance journals, respectively.
At EMI's request, visiting scholar Jin Young briefly examined our emerging markets database to see if Karolyi's observations from 14 top finance journals could also be observed among the 51 journals from which our database derives its content (51 top journals, 44 markets, ’07-’11) and uncovered similar - perhaps even more pronounced - results when it comes to emerging markets:
- Only 7.3 % of the nearly 20,000 articles published between ’07 and ’11 by the 51 journals EMI tracks deal with the 44 emerging market countries in the database (these countries constitute 37% of world GDP)
- Only two fields of study – Ethics and International Business – have a meaningfully stronger emphasis on emerging markets at 20.6% and 27.5% of articles published in those fields respectively. The emphasis on Ethics and International Business in itself suggests a certain developed market bias.
Specific country foreign bias, however, is less evident.
- China, the most intensely researched emerging market accounts for 27.2% of all articles on emerging markets and 31.0% of the GDP of the 44 countries tracked
Karolyi’s work was unable to meaningfully explain this bias based on a broad range of potential supply (e.g., the number of published authors from non-US universities, PhDs from non-US programs, etc.), demand (e.g., measures dealing with the scale and scope of financial markets) and behavioral (e.g., momentum) factors. After citing diminishing impediments to international research (such as the availability and quality of data), Karolyi concludes by encouraging:
- Journal editors to “tip their decisions in favor of (studies) that meet a quality threshold but that also explore the world beyond the U.S.”
Department chairs, deans and associate deans to allow an “understanding of these publication rates to make more informed decisions about promotion and tenure”
- Executives in industry to “create incentives for more research on international markets”.
EMI’s motivation for creating the new emerging markets research database is to promote scholarship on, dissemination of and support for emerging markets research at Cornell University and beyond. By periodically surveying the trends in the database, we hope to enhance its value for our academic and industry colleagues alike.
Table 1 - Only 7.34% of total citations identified were focusing on emerging markets
Table 2 - Citations on China is under-represented comparing to World GDP, but this bias is less evident comparing to Emerging Markets GDP
Reference: (1) - Home Bias, An Academic Puzzle, Social Science Research Network