We examine a theoretically robust but previously undocumented issue of what drives foreign portfolio investments into emerging markets. Foreign institutional investors (FIIs) are often blamed as fair-weather friends who pull out their investment at the first sign of trouble. Using a bottom-up approach, we explore this possibility. We demonstrate the influence of the firm-specific factors such as size, book to market ratio, the riskiness of the stocks, stock prices, dividend yield, liquidity, leverage, and earnings on the FII ownership. We find no evidence to show foreign investors as fair-weather friends. Instead, they are smart traders who follow a diligent investment strategy. We suggest reforms in corporate governance and improvement in financial fundamentals of the companies to attract FII ownership.

我们研究了一个理论上可靠但之前没有记录的问题，即是什么推动外国证券投资进入新兴市场。外国机构投资者（FII）经常被指责为酒肉朋友，一旦出现麻烦就撤资。我们使用自下而上的方法探索这种可能性。我们论证了公司特定因素（例如规模、账面市值比、股票风险、股价、股息收益率、流动性、杠杆率和收益）对 FII 所有权的影响。我们没有发现任何证据表明外国投资者是酒肉朋友。相反，他们是遵循勤奋投资策略的聪明交易者。我们建议改革公司治理并改善公司的财务基本面，以吸引境外机构投资者持股。