This paper examines cross regional differences in tone for the same news event and relates it to local trading activity. Using a combination of detailed investor and media data the paper shows that local individual investors seem to be significant net buyers of local stocks that are in the local...

We investigate how the reassignment of a fund's Morningstar category affects fund flow and Morningstar star rating. We find that funds assigned to a different category gain positive abnormal flows and this effect is significant mainly for high-rated funds. Category reassignment does not improve...

We examine how owners’ portfolio diversification influences their firms’ financial decision-making and performance. We find that firms with high local ownership use less leverage, but firms with local ownership by locally biased owners use higher debt levels relative to firms with...

Using a large set of Swedish data at the individual and institutional investor level this paper studies local bias among investors. In relation to existing research the paper expects that the investor groups defined in this paper in Sweden are prone to local bias and that the results are...

This book helps readers understand the widely documented distortion in the portfolio choice of individual investors toward proximate firms - the proximity bias phenomenon. First, it recapitulates the fundamentals of modern portfolio theory. It then goes on to describe and demonstrate different...

Using data on direct investments of individual investors from 2000 to 2008, this paper shows that investors are persistent in holding local stocks even though they do not earn abnormal return on local biased investments. This preference might be explained by familiarity hypothesis, hedging needs...