Local Does as Local Is : Information Content of The Geography of Individual Investors' Common Stock Investments  

Oleh:

Weisbenner, Scott J. ; Ivkovic, Zoran

Jenis: Article from Journal - ilmiah internasional
Dalam koleksi: The Journal of Finance (EBSCO) vol. 60 no. 1 (Feb. 2005), page 267-306.
Topik: INVESTMENTS; investment policy; preferences; bias; rates of return; studies; regression analysis; economic models
Fulltext: p 267.pdf (2.17MB)

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Perpustakaan Pusat (Semanggi) Nomor Panggil: JJ88 Non-tandon: 1 (dapat dipinjam: 0) Tandon: tidak ada

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Using data on the investments a large number of individual investors made through a discount broker from 1991 to 1996, we find that households exhibit a strong preference for local investments. We test whether this locality bias stems from information or from simple familiarity. The average household generates an additional annualized return of 3.2% from its local holdings relative to its nonlocal holdings, suggesting that local investors can exploit local knowledge. Excess returns to investing locally are even larger among stocks not in the S & P 500 index (firms for which information asymmetries between local and nonlocal investors may be largest).

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