Home Away From Home: Geography of Information and Local Investors

By Gennaro Bernile, Alok Kumar, Johan Sulaeman. 2015

185 citations recorded by the source corpus.

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.

Subfields: Accounting, Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/f6c0cbc8f0735db6a7b784ecbbd295044ff07977

Citations in the corpus

• Employee Quality and Financial Reporting Outcomes (2017, unknown): “K, compared to 8.1 unique states for Bernile et al. (2015) and 7.9 unique states for Garcia and Norli (2012).”