Abstract

http://ssrn.com/abstract=2373097
 


 



Does Diversity Lead to Diverse Opinions? Evidence from Languages and Stock Markets


Yen-Cheng Chang


Shanghai Advanced Institute of Finance, Shanghai Jiao Tong University; China Academy of Financial Research (CAFR)

Harrison G. Hong


Princeton University - Department of Economics; National Bureau of Economic Research (NBER)

Larissa Tiedens


Stanford Graduate School of Business

Bin Zhao


Shanghai Advanced Institute of Finance; Shanghai Jiao Tong University (SJTU); China Academy of Financial Research (CAFR)

December 26, 2013

Rock Center for Corporate Governance at Stanford University Working Paper No. 168
Stanford University Graduate School of Business Research Paper No. 13-16

Abstract:     
An oft-cited premise for why diverse societies, be it ethnic, linguistic or religious, can grow faster than homogeneous ones is that they bring about diverse opinions, which foster problem solving and creativity. We provide evidence for this premise using a linguistic measure of diversity across Chinese provinces and stock market measures of diverse opinions. This cross-province variation in linguistic diversity is correlated with the extent of hilly terrain in a province but is uncorrelated with financial development in that province. Households in provinces with more linguistic diversity have more diverse opinions as measured by greater trading of and disagreement on stock message boards about local stocks. Linguistic diversity is also correlated with small private enterprise diversity. An analogous cross-country regression suggests that our conclusion extrapolates beyond China.

Number of Pages in PDF File: 67

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Date posted: January 1, 2014 ; Last revised: February 4, 2014

Suggested Citation

Chang, Yen-Cheng and Hong, Harrison G. and Tiedens, Larissa and Zhao, Bin, Does Diversity Lead to Diverse Opinions? Evidence from Languages and Stock Markets (December 26, 2013). Rock Center for Corporate Governance at Stanford University Working Paper No. 168; Stanford University Graduate School of Business Research Paper No. 13-16. Available at SSRN: http://ssrn.com/abstract=2373097 or http://dx.doi.org/10.2139/ssrn.2373097

Contact Information

Yen-Cheng Chang (Contact Author)
Shanghai Advanced Institute of Finance, Shanghai Jiao Tong University ( email )
211 West Huaihai Road
Shanghai, 200030
China
China Academy of Financial Research (CAFR)
211 West Huaihai Road
Shanghai, 200030
China

Harrison G. Hong
Princeton University - Department of Economics ( email )
Princeton, NJ 08544-1021
United States
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Larissa Tiedens
Stanford Graduate School of Business ( email )
518 Memorial Way
Stanford, CA 94305-5015
United States
Bin Zhao
Shanghai Advanced Institute of Finance ( email )
211 West Huaihai Road
Shanghai, 200030
China
Shanghai Jiao Tong University (SJTU) ( email )
KoGuan Law School
Shanghai 200030, Shanghai 200052
China
China Academy of Financial Research (CAFR) ( email )
1954 Huashan Road
Shanghai P.R.China, 200030
China
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