Professor Seungjun Kim demonstrates how knowledge of firms’ political connections can explain differences in the investment patterns of domestic and foreign stock investors. Previous studies often assume that foreign investors are politically well-informed and react swiftly to domestic political events. Professor Kim evaluates this claim by analyzing and comparing the daily stock portfolios of domestic and foreign investors during the unpredictable 2012 presidential election in South Korea.

His research shows that, following the somewhat surprising election result, domestic stock investors actively used information about firms’ political connections to adjust their investments. In contrast, foreign stock investors did not exhibit such behavior. This finding refines the conventional image of foreign investors and highlights that their understanding of the domestic political landscape in the countries in which they invest may not be as thorough or exhaustive as previously assumed.

https://www.tandfonline.com/doi/abs/10.1080/13563467.2025.2504396