Access

You are not currently logged in.

Access your personal account or get JSTOR access through your library or other institution:

login

Log in to your personal account or through your institution.

If You Use a Screen Reader

This content is available through Read Online (Free) program, which relies on page scans. Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.

Individual Investors and Local Bias

MARK S. SEASHOLES and NING ZHU
The Journal of Finance
Vol. 65, No. 5 (OCTOBER 2010), pp. 1987-2010
Published by: Wiley for the American Finance Association
Stable URL: http://www.jstor.org/stable/40864993
Page Count: 24
  • Read Online (Free)
  • Download ($33.95)
  • Subscribe ($19.50)
  • Cite this Item
Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.
Individual Investors and Local Bias
Preview not available

Abstract

The paper tests whether individuals have value-relevant information about local stocks (where "local" is defined as being headquartered near where an investor lives). Our methodology uses two types of calendar-time portfolios—one based on holdings and one based on transactions. Portfolios of local holdings do not generate abnormal performance (alphas are zero). When studying transactions, purchases of local stocks significantly underperform sales of local stocks. The underperformance remains when focusing on stocks with potentially high levels of information asymmetries. We conclude that individuals do not help incorporate information into stock prices. Our conclusions directly contradict existing studies.

Page Thumbnails

  • Thumbnail: Page 
1987
    1987
  • Thumbnail: Page 
1988
    1988
  • Thumbnail: Page 
1989
    1989
  • Thumbnail: Page 
1990
    1990
  • Thumbnail: Page 
1991
    1991
  • Thumbnail: Page 
1992
    1992
  • Thumbnail: Page 
1993
    1993
  • Thumbnail: Page 
1994
    1994
  • Thumbnail: Page 
1995
    1995
  • Thumbnail: Page 
1996
    1996
  • Thumbnail: Page 
1997
    1997
  • Thumbnail: Page 
1998
    1998
  • Thumbnail: Page 
1999
    1999
  • Thumbnail: Page 
2000
    2000
  • Thumbnail: Page 
2001
    2001
  • Thumbnail: Page 
2002
    2002
  • Thumbnail: Page 
2003
    2003
  • Thumbnail: Page 
2004
    2004
  • Thumbnail: Page 
2005
    2005
  • Thumbnail: Page 
2006
    2006
  • Thumbnail: Page 
2007
    2007
  • Thumbnail: Page 
2008
    2008
  • Thumbnail: Page 
2009
    2009
  • Thumbnail: Page 
2010
    2010