Tatyana Sokolyk’s investment research recently took the spotlight at an international conference.
The Associate Professor of Finance at Brock’s Goodman School of Business received the Best Paper Award during the Academic Research Colloquium for Financial Planning and Related Disciplines in Arlington, Va., in February.
Her co-authored paper, titled, “The effect of familiarity with foreign markets on institutional investors’ performance,” focuses on how investors perform when they concentrate their holdings in familiar foreign markets, or countries that are similar to the investor’s home country in terms of culture, language, legal origin and geographic proximity.
The award, Sokolyk says, helps to bring awareness to this area of research.
“I hope this research will help to advance our understanding of the ‘international under-diversification puzzle’ and it is nice to get recognition for the work we have done,” she said.
Co-authored with Mark Fedenia, Associate Professor of Finance at University of Wisconsin-Madison, and Hilla Skiba, Assistant Professor of Finance and Real Estate at Colorado State University, the research project studied portfolio allocations and performance of institutional investors from 46 countries over a 16-year span.
The study is based on prior research that shows that investors often make their investments in their home country or in familiar foreign markets and therefore may not be diversified enough internationally.
Sokolyk and her co-authors wanted to find out whether this choice is based on behavioral bias or an information advantage.
The study finds that, on average, investors achieve higher risk-adjusted returns in familiar foreign markets and suggests that investors have an information advantage that is rationally exploited in familiar foreign markets.
“Goodman’s research record is getting stronger with every passing year and Tatyana’s recognition in this category is an example of the strength of our faculty,” Goodman School of Business Dean Andrew Gaudes said.
The Academic Research Colloquium for Financial Planning and Related Disciplines is an international forum of researchers, practitioners, graduate students and leaders of financial planning practice that was designed to share and showcase relevant research within financial planning, as well as disciplines that directly or indirectly relate to the financial planning body of knowledge or financial planning practice.