Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/288745 
Year of Publication: 
2020
Citation: 
[Journal:] Management Review Quarterly [ISSN:] 2198-1639 [Volume:] 72 [Issue:] 1 [Publisher:] Springer International Publishing [Place:] Cham [Year:] 2020 [Pages:] 21-57
Publisher: 
Springer International Publishing, Cham
Abstract: 
The home bias like the disposition effect is a well-researched economic phenomenon in investor behaviour which has been examined in finance journal articles for decades. While there is little doubt about the existence of the bias, its magnitude varies across countries and investor groups. The home bias has to be regarded as a multifactorial phenomenon, a combination of numerous causes which all synergistically contribute. In contrast to other biases the home bias can at least partially be explained by reasons beyond irrational investor behaviour. While institutional restrictions play a minor role, informational asymmetries and superior information of domestic investors are important factors. Thus, the performance of investments may well benefit from a home bias, and the bias then no longer would be a puzzle but rather rational behaviour as a lower diversification level may lead to higher returns. The contemporary understanding of the home bias gains in relevance as the ongoing political debate in Germany has to clarify an institutional framework for long-run retirement savings plans of private households based on equity investments.
Subjects: 
Home bias
Local bias
Domestic bias
Behavioural bias
Market imperfections
JEL: 
D14
D91
E71
G11
G12
G41
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article
Document Version: 
Published Version

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