Local does as local is : information content of the geography of individual investors' common stock investments

Deskripsi

Using data on the investments a large number of individual investors made through a discount broker from 1991 to 1996, we find that household 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 kowledge..Printed Journal