Corporate Disclosure & Investor Protection Correlation in Reduction of Equity Home Bias

Komal Singh and Divya Priyank
NMIMS, Kirit P. Mehta School of Law, Mumbai, India.

Volume III, Issue V, 2020

Today, the corporate world is full of malpractices and frauds happening all around the globe. The basic idea of the formation of a company and promotion of healthy commercial growth gets diluted in such situations where wrongful trading or fraudulent trading is involved. Corporate disclosure is one such important concept which helps and assists in protecting the rights of investors and shareholders of a company. The paper includes within its ambit the introduction of Corporate Disclosure in private sector along with enunciating the take of India on Corporate Disclosure. The authors through this research paper attempt to reflect the importance of corporate disclosure and investor protection which in turn helps in reduction of home bias which is quite prevalent among investors. Home bias is the preference given by the investors to domestic equities in place of investing in foreign equities in markets outside the home country. The researchers elucidate the problems associated with home bias and futher stresses upon the need for International diversification. International diversification is a major tool for reducing the home bias and plays a vital role in the growth of a country. Therefore, it can be comfortably said that there is a direct link between corporate disclosure, investor protection, portfolio investment and international diversification leading the way to reduction in equity home bias and promotion of growth. This link has been well discussed in the present research paper, establishing the need for corporate disclosure and investor protection in countries.

Keywords: Corporate Disclosure, Portfolio Investment, Investor Protection, Home Bias, International Diversification