publication . Other literature type . Article . Preprint . 2001

The Geography of Investment: Informed Trading and Asset Prices

Joshua D. Coval; Tobias J. Moskowitz;
Open Access
  • Published: 01 Aug 2001
  • Publisher: University of Chicago Press
Abstract
This paper uses geography to shed light on the role of asymmetric information in asset pricing. Demonstrating that investors possess significant informational advantages in evaluating nearby investments, we find that active mutual fund managers overweight proximate firms in their portfolios and earn substantial abnormal returns in local holdings. These findings are more pronounced among funds which are small, have few holdings, and operate out of remote locations. Aggregating across all funds, we use the fraction of a stock's shares held by local investors as a measure of the information asymmetry in its investor base. We find that a firm's degree of local owner...
Subjects
Medical Subject Headings: health care economics and organizations

5a/ b 5a'

Any information missing or wrong?Report an Issue