In this paper, we characterize foreign ownership using a dataset of ownersh
ip and attributes of Swedish firms. The analysis reveals that foreigners sh
ow a preference for large firms, firms paying low dividends, and firms with
large cash positions on their balance sheets. When we further analyze the
preference for large firms, we find that market liquidity and presence in i
nternational markets, measured through export sales or listings on other ex
changes, seem to characterize foreign holdings better than firm size alone.
Foreigners also tend to underweight firms with a dominant owner. Important
ly, we demonstrate that most of the features associated with foreign owners
hip are driven by the fact that foreign investors typically are mutual fund
s or other institutional investors. Hence. we identify an institutional inv
estor bias rather than a foreign investor bias. Finally, using ownership da
ta on a country level, we conclude that the results are particularly strong
among U.S. investors, who comprise the largest institutions among foreign
investors. (C) 2001 Elsevier Science S.A. All rights reserved. JEL classifi
cation. G1; G15.