Information transfer and homophily in stock markets

According to information theory, central agents are better informed. Thus to gain higher returns, investors are motivated to seek connections. At the same time, previous studies provide evidence on homophily in social networks: individuals tend to establish relationships with the alike to themselves. We investigate what combinations of socioeconomic investor attributes are more likely to be associated with information transfer. We find that similarity in investors' age, geographical location, or length of the time they have known each other under certain circumstances can affect information transfer. Our findings contribute to the identification of private information pathways in the stock market