Cross-border corporate ownership and capital market integration in Europe:: evidence from portfolio and industrial holdings

The level and determinants of cross-border holdings are evaluated using data on the ownership structures of 711 MSCI index companies in 16 European countries. The level of foreign ownership in the 16 countries is significant, but spread unevenly, with US financial institutions controlling the majority of foreign stakes. Countries borders, rather than company size ranges are the main lines of discrimination between high and low levels of foreign corporate ownership. Major factors influencing the intensity of cross-border links include the proximity of investors to the destination of capital, and corporate governance. From the perspective of international corporate ownership, the level of capital market integration in Europe is low and the concept of the pan-European company remains a long way from being realised. Implications are drawn for future research and integration policy.