Publication Type

Working Paper

Publication Date

4-2016

Abstract

This study examines how changes in the information environment affect the informational advantage of geographically proximate agents. We find that the long-term advantage of local agents disappeared at the turn of the millennium. This is accompanied by the reduction in local bias of institutional investors and equity analysts. However, institutional investors continue to trade local stocks disproportionately more often than nonlocal stocks; moreover, their local trades outperform nonlocal trades in the short term -- even for large and liquid stocks. Our results are consistent with improvements in the information environment shortening the horizon of geographic proximity-based informational advantage.

Keywords

Institutional investors; equity analysts; local bias; informational advantage

Discipline

Finance and Financial Management

Research Areas

Finance

Publisher

SSRN

Creative Commons License

Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.

Additional URL

https://ssrn.com/abstract=2772127

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