Publication Type
Journal Article
Publication Date
9-2013
Abstract
We develop a 10K-based measure of spatial variation in the availability of value-relevant information that reflects the multi-dimensional nature of firm location. Spatially distributed information generates location-based information asymmetries that affect institutional portfolio decisions and performance. Institutions overweigh firms with greater local economic exposure and earn superior returns on corresponding trades, even for firms not headquartered locally. These patterns are stronger among harder-to-value stocks. Consistent with local informational advantage, local investor performance increases with the local exposure of individual stock holdings and her portfolio as a whole, and more so when her portfolio is more heavily tilted toward local stocks.
Keywords
Multi-Dimensional Firm Location, Information Asymmetry, Local Informational Advantage
Discipline
Business Administration, Management, and Operations
Research Areas
Finance
Citation
BERNILE, Gennaro; Kumar, Alok; and Sulaeman, Johan.
Home away from home: Geography of information and local investors. (2013). Research Collection Lee Kong Chian School Of Business.
Available at: https://ink.library.smu.edu.sg/lkcsb_research/3777
Creative Commons License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.