27 Pages Posted: 31 May 2000
Date Written: February 2000
This paper documents that investors are more likely to hold, buy and sell the stocks of Finnish firms that are located close to the investor, that communicate in the investor's native tongue, and that have chief executives of the same cultural background. These distance, language and cultural biases are less prevalent among the most investment-savvy institutions than they are among both households and less savvy institutions. Regression analysis indicates (1) that the marginal effect of distance is less for firms that are more nationally known, and for distances that exceed one hundred kilometers and (2) more sophisticated individuals exhibit less distance bias.
JEL Classification: G10
Suggested Citation: Suggested Citation
Grinblatt, Mark and Keloharju, Matti, Distance, Language, and Culture Bias: The Role of Investor Sophistication (February 2000). Yale ICF Working Paper No. 00-04; Yale SOM Working Paper No. ICF 00-04. Available at SSRN: https://ssrn.com/abstract=222169 or http://dx.doi.org/10.2139/ssrn.222169