This study investigates attributes of local firms that determine investment biases using mutual funds holding data across 48 markets. Controlling for variations in market level environments, we find that firm characteristics related to transaction cost, corporate governance, information asymmetry and local familiarity create significant barriers to foreign investments. The extent to which information asymmetry and familiarity constrain investment allocation is more observable for foreign than for domestic investors, even in developed and liberalized markets. However, in emerging and restricted markets, variations in foreign investment bias are mainly driven by market level cross-border investment barriers. Overall, the well-documented “home bias” phenomenon may be a joint effect of both firm and market level investment barriers.