Investment restrictions and the cross-border flow of information: Some empirical evidence

We examine market responses to earnings announcements in Singapore and Thailand, where shares restricted to local investors trade alongside otherwise identical shares available to foreigners. Our evidence is consistent with foreigners having superior information-processing ability, rather than locals having pre-announcement private information. A small sample of Thai data that identifies trader nationality shows reduced foreign trading in the pre-announcement period and increased buying afterwards, suggesting that foreigners rely on their information-processing skills rather than pre-announcement information.