Game Hoarding in Europe: Stock-Price Consequences of Local Bias?
University of South Florida - College of Business Administration
Maja Stoholm Sørensen
May 26, 2010
Paris December 2010 Finance Meeting EUROFIDAI - AFFI
Hong, Kubik and Stein (JFE 2008) find that the price of a stock in the US is decreasing in the ratio of the aggregate book value of listed firms in a region to the aggregate personal income in the same region (“RATIO”), an “only-game-in-town” effect. We first replicate the HKS (2008) study using European data and find an opposite effect, a “game-hoarding” effect. We then investigate the underlying factors of RATIO and find that after controlling for differences in origin of law, investor rights, corruption and Euro adoption, neither a game-hoarding effect nor an only-game-in-town effect is strongly supported in the European case. The results are important in understanding the concept of local bias in a cross-country framework.
Number of Pages in PDF File: 37
Keywords: Local bias, Only-game-in-town effect, Game-hoarding effect, Europe
JEL Classification: G11, G12working papers series
Date posted: October 22, 2010 ; Last revised: June 1, 2012
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo2 in 0.360 seconds