Home Advantage: Local Investors and Information Type
53 Pages Posted: 19 Nov 2021 Last revised: 17 Jul 2023
Date Written: July 17, 2023
Abstract
Research suggests that investors closest to companies have an advantage in acquiring or processing information about them. We investigate whether this advantage is affected by the type of information (company-specific, country-specific, or world). Using Brazilian companies simultaneously traded in São Paulo and New York, we find that local investors’ information advantage increases on days when most information is company-specific and is more pronounced for more local, less international firms. On days when the price swings are not company-specific, this is not the case and, if anything, it is global investors’ information advantage that increases.
Keywords: Geographic location, Information asymmetry, Information type, Local and global investors
JEL Classification: G14, G15, G20
Suggested Citation: Suggested Citation