Local Bias in Investor Attention: Evidence from China's Internet Stock Message Boards

Posted: 27 Sep 2014 Last revised: 25 Jan 2018

See all articles by Yuqin Huang

Yuqin Huang

Central University of Finance and Economics (CUFE)

Huiyan Qiu

University of Hong Kong - Faculty of Business and Economics

Zhiguo Wu

China Securities Regulatory Commission

Date Written: July 1, 2016

Abstract

In contrast to studies that focus on investment accounts, this study examines local bias in investor attention by analyzing messages posted by investors on China's Internet stock message boards. We find that individual investors pay more attention to stocks of local companies than to those of nonlocal companies. Local bias is particularly strong in underdeveloped regions, toward large, non-CSI 300, and low-turnover stocks and toward stocks with names that indicate their localities. The marginal effect of local bias is also considerably strong for distances within 500 km.

Keywords: locan bias, limited attention, Internet stock message boards

JEL Classification: G10; G11; G14; G15

Suggested Citation

Huang, Yuqin and Qiu, Huiyan and Wu, Zhiguo, Local Bias in Investor Attention: Evidence from China's Internet Stock Message Boards (July 1, 2016). Journal of Empirical Finance,2016, 38, 338–354., Available at SSRN: https://ssrn.com/abstract=2192727 or http://dx.doi.org/10.2139/ssrn.2192727

Yuqin Huang (Contact Author)

Central University of Finance and Economics (CUFE) ( email )

39 South College Road
Haidian District
Beijing, Beijing 100081
China

Huiyan Qiu

University of Hong Kong - Faculty of Business and Economics ( email )

Pokfulam Road
Hong Kong
China
+852 28591046 (Phone)
+852 25481152 (Fax)

Zhiguo Wu

China Securities Regulatory Commission ( email )

Beijing
China

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