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Home away from home : geography of information and local investors
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Bernile, Gennaro, Kumar, Alok and Sulaeman, Johan (2015) Home away from home : geography of information and local investors. The Review of Financial Studies, 28 (7). pp. 2009-2049. doi:10.1093/rfs/hhv004 ISSN 0893-9454.
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Official URL: http://dx.doi.org/10.1093/rfs/hhv004
Abstract
We develop a 10-K-based multidimensional measure of firm locations. Using this measure, we show that firm-level information is geographically distributed and institutional investors are able to exploit the resulting information asymmetry. Specifically, institutional investors overweigh firms whose 10-K frequently mentions the investors' state even when those firms are not headquartered locally and earn superior returns on those stocks. These ownership and performance patterns are stronger among hard-to-value firms. Local investor performance increases with the degree of local bias and with the local economic exposure of portfolio firms. Overall, geographical variation in firm-level information generates economically significant location-based information asymmetry.
Item Type: | Journal Article | ||||
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Divisions: | Faculty of Social Sciences > Warwick Business School | ||||
Journal or Publication Title: | The Review of Financial Studies | ||||
Publisher: | Oxford University Press | ||||
ISSN: | 0893-9454 | ||||
Official Date: | July 2015 | ||||
Dates: |
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Volume: | 28 | ||||
Number: | 7 | ||||
Page Range: | pp. 2009-2049 | ||||
DOI: | 10.1093/rfs/hhv004 | ||||
Status: | Peer Reviewed | ||||
Publication Status: | Published | ||||
Access rights to Published version: | Restricted or Subscription Access |
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