Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/248406 
Year of Publication: 
2021
Series/Report no.: 
CFS Working Paper Series No. 671
Publisher: 
Goethe University Frankfurt, Center for Financial Studies (CFS), Frankfurt a. M.
Abstract: 
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 flights 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.
Subjects: 
attention
retail investors
local investors
distance
news
liquidity
volatility
JEL: 
D83
G11
G12
G14
G50
L86
R32
Document Type: 
Working Paper

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