The geography of investor attention

  • Retail investors pay over twice as much attention to local companies than non-local ones, based on Google searches. News volume and volatility amplify this attention gap. Attention appears causally related to perceived proximity: first, acquisition by a nonlocal company is associated with less attention by locals, and more by nonlocals close to the acquirer; second, COVID-19 travel restrictions correlate with a drop in relative attention to nonlocal companies, especially in locations with fewer fights after the outbreak. Finally, local attention predicts volatility, bid-ask spreads and nonlocal attention, not viceversa. These findings are consistent with local investors having an information-processing advantage.

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Author:Stefano Mengoli, Marco Pagano, Pierpaolo Pattitoni
Parent Title (English):Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 671
Series (Serial Number):CFS working paper series (671)
Publisher:Center for Financial Studies
Place of publication:Frankfurt am Main
Document Type:Working Paper
Year of Completion:2021
Year of first Publication:2021
Publishing Institution:Universit├Ątsbibliothek Johann Christian Senckenberg
Release Date:2021/12/20
Tag:attention; distance; liquidity; local investors; news; retail investors; volatility
Issue:November 21, 2021
Page Number:50
Marco Pagano gratefully acknowledges financial support from the Italian Ministry for University and Research (MUR) and the Einaudi Institute for Economics and Finance (EIEF).
Institutes:Wirtschaftswissenschaften / Wirtschaftswissenschaften
Wissenschaftliche Zentren und koordinierte Programme / Center for Financial Studies (CFS)
Dewey Decimal Classification:3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft
Licence (German):License LogoDeutsches Urheberrecht