Individual Investors’ Portfolio Choice and Birthplace Bias

• This paper examines whether the geographical proximity bias of individual investors stems from information asymmetry or behavioral factors. We introduce the concept of ‘Birthplace Bias’ and find that the proximity bias is strongest for investors that have never moved away from the area they were born. It is stronger the longer the investor has lived in the same geographical area. However, neither local bias nor birthplace bias appears to pay off in terms of abnormal portfolio return. This has policy implications for the confidence in financial markets as it suggests that Efficient Market Hypothesis holds.

Subject headings

SAMHÄLLSVETENSKAP  -- Ekonomi och näringsliv -- Företagsekonomi (hsv//swe)

SOCIAL SCIENCES  -- Economics and Business -- Business Administration (hsv//eng)

Keyword

Birthplace Bias

Local Bias

Individual Investors

Information Asymmetry.

Publication and Content Type

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