Foreign ownership in emerging stock markets

• Firm characteristics establish the extent information asymmetry impacts the level of foreign ownership in Vietnam.
• Foreign investors adopt a long term investment horizon and employ a buy and hold strategy to maximize growth prospects.
• Riskier firms and where information asymmetries provide advantages to domestic investors are avoided.

We use several firm characteristics to establish the extent that information asymmetry impacts the level of foreign ownership in Vietnam. The findings indicate that foreign investors adopt a long term investment horizon and employ a buy and hold strategy to exploit potential growth prospects. These investors also avoid firms with riskier financial management practices and where information asymmetries provide advantages to domestic investors. Overall, these findings support the importance of linking deregulation with financial market openness and transparency to enhance and encourage international portfolio investment.