Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/52130
Authors: 
Baltzer, Markus
Stolper, Oscar
Walter, Andreas
Year of Publication: 
2011
Series/Report no.: 
Discussion Paper Series 1: Economic Studies 2011,23
Abstract: 
We analyze the effect of geographic proximity on individual investors' portfolio choice. Using a unique data set which covers the common stockholdings of private households at regional banks in Germany, we document strong and consistent overinvestment in geographically close companies. Our results conclusively reject the presence of an informational advantage ('home-field advantage') of local over non-local investors. Instead, households' preference for local equity turns out to be familiarity-driven. We conclude that individual investors' local bias is induced by ambiguity aversion in the portfolio selection process rather than a trading strategy based on superior information about local companies.
Subjects: 
local bias
portfolio diversification
household finance
investor behaviour
ambiguity aversion
JEL: 
G01
G11
G14
ISBN: 
978-3-86558-751-0
Document Type: 
Working Paper

Files in This Item:
File
Size
470.67 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.