TY  - JOUR
AU  - Weisbenner,Scott
AU  - Ivkovich,Zoran
TI  - Local Does as Local Is: Information Content of the Geography of Individual Investors' Common Stock Investments
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 9685
PY  - 2003
Y2  - May 2003
UR  - http://www.nber.org/papers/w9685
L1  - http://www.nber.org/papers/w9685.pdf
N1  - Author contact info:
Scott Weisbenner
University of Illinois at Urbana-Champaign
Department of Finance
340 Wohlers Hall, MC-706
1206 South Sixth Street
Champaign, IL  61820
Tel: 217/333-0872
Fax: 217/244-9867
E-Mail: weisbenn@illinois.edu

Zoran Ivkovich
Department of Finance
Michigan State University
315 Eppley Center
East Lansing, MI 48824
Tel: (517) 353-4593
E-Mail: ivkovich@bus.msu.edu
AB  - Using a data set on the investments made by a large number of retail investors from 1991 to 1996, we find that households exhibit a strong preference for local investment - the average household invests nearly a third of their portfolio  in  firms headquartered within 250 miles.  We test whether this locality bias is driven by  information  or by simple familiarity.  The average household generates an additional return of 3.7% per year from its local holdings relative to its non-local holdings, suggesting local investors are able to exploit local knowledge. The excess return to investing locally is even larger among stocks not in the S&P 500 index  (firms  where  informational asymmetries  between  local  and  non-local investors may be largest), while there is no excess return earned by  households that invest in local S&P 500 stocks.
ER  -