Do Individual Investors Have Asymmetric Information Based on Work Experience?

38 Pages Posted: 8 Sep 2009

See all articles by Trond Doskeland

Trond Doskeland

Norwegian School of Economics (NHH)

Hans K. Hvide

University of Bergen - Department of Economics; University of Aberdeen - Business School; Centre for Economic Policy Research (CEPR); Institute for the Study of Labor (IZA)

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Date Written: August 2009

Abstract

Using a novel and unique dataset from Norway, we analyze whether professional proximity is associated with asymmetric information and abnormal returns. We find that individuals hold an excess weight in stocks that are professionally close. For example, after excluding holdings of own-company and previous employer stock, investors on average hold 11% of their portfolio in stocks within their two-digit industry of employment. We find no evidence that investments in professionally close stocks are associated with a positive abnormal return in either the short or the long term. In some specifications, we find evidence of a negative abnormal return. We conclude there is no evidence of professional proximity being associated with asymmetric information and abnormal returns.

Keywords: asymmetric information, behavioral finance, familiarity, household finance

JEL Classification: D83, G11, J24

Suggested Citation

Doskeland, Trond and Hvide, Hans, Do Individual Investors Have Asymmetric Information Based on Work Experience? (August 2009). CEPR Discussion Paper No. DP7428, Available at SSRN: https://ssrn.com/abstract=1469926

Trond Doskeland

Norwegian School of Economics (NHH) ( email )

Helleveien 30
Bergen, NO-5045
Norway

Hans Hvide (Contact Author)

University of Bergen - Department of Economics ( email )

Fosswinckelsgt. 6
N-5007 Bergen, 5007
Norway

University of Aberdeen - Business School ( email )

Edward Wright Building
Dunbar Street
Aberdeen, Scotland AB24 3QY
United Kingdom

HOME PAGE: http://hans.hvide.googlepages.com/

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Institute for the Study of Labor (IZA) ( email )

P.O. Box 7240
Bonn, D-53072
Germany

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