Local Does as Local Is: Information Content of the Geography of Individual Investors' Common Stock Investments
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 househol...
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| Veröffentlicht in: | The Journal of finance (New York) 2005-02, Vol.60 (1), p.267-306 |
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| container_title | The Journal of finance (New York) |
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| creator | IVKOVIĆ, ZORAN WEISBENNER, SCOTT |
| description | 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). |
| doi_str_mv | 10.1111/j.1540-6261.2005.00730.x |
| format | Article |
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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. 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| language | eng |
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| source | Wiley Online Library Journals Frontfile Complete; Jstor Complete Legacy |
| subjects | Bias Business structures Common stock Economic models Finance Financial investments Financial portfolios Geography Information Information asymmetry Investment Investment policy Investment portfolios Investments Investors Knowledge Local economy Portfolio investments Preferences Rates of return Regression analysis Stock ownership Stock returns Stock shares Studies U.S.A |
| title | Local Does as Local Is: Information Content of the Geography of Individual Investors' Common Stock Investments |
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