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Local News and the Change in Local Portfolios

55 Pages Posted: 27 Jul 2016 Last revised: 30 Oct 2017

Taylan Mavruk

University of Gothenburg - Centre for Finance - School of Business, Economics and Law

Multiple version iconThere are 2 versions of this paper

Date Written: October 29, 2017

Abstract

This paper tests the investor attention hypothesis and shows that local individual investors are significant net buyers of local stocks that are in the local news. Significant reversal effects on portfolio change are observed. Interestingly, for the given local news, non-locals change their portfolios in the local stocks by 6% on average. The tone of news amplifies the effect by 7%. Taken together, local media seems to decrease the information search costs of investors, particularly non-locals, thus leading to a decrease in information asymmetry between local and non-local investors.

Keywords: local media, local trades, investor attention hypothesis, information asymmetry

JEL Classification: G11, G14

Suggested Citation

Mavruk, Taylan, Local News and the Change in Local Portfolios (October 29, 2017). Swedish House of Finance Research Paper No. 17-12. Available at SSRN: https://ssrn.com/abstract=2814483 or http://dx.doi.org/10.2139/ssrn.2814483

Taylan Mavruk (Contact Author)

University of Gothenburg - Centre for Finance - School of Business, Economics and Law ( email )

Vasagatan 1
Gothenburg, 40530
Sweden

HOME PAGE: http://www.cff.handels.gu.se/faculty-presentation/taylan-mavruk/

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