Neighbors Matter: Geographical Distance and Trade Timing in the Stock Market

22 Pages Posted: 24 Jul 2018

See all articles by Kęstutis Baltakys

Kęstutis Baltakys

Tampere University of Technology

Margarita Baltakienė

Tampere University of Technology

Hannu Kärkkäinen

Tampere University of Technology

Juho Kanniainen

Tampere University of Technology

Date Written: July 3, 2018

Abstract

The starting point of this paper is that neighboring investors may talk to each other sharing information about their transactions in stock markets, leading to similar trading behavior. We find that pairwise trade timing similarities between investor pairs are negatively associated to geographical distance between corresponding investor pairs. This suggests that local information transfer channels between neighboring individual investors are used in decision making. We also observe that differences in age and language moderate this association. The analysis is conducted using investor level data from different regions of Finland.

Keywords: investor trading, geographical distance, information transfer, private information, investor network, social interactions, behavioral finance, behavioral economics, social networks, individual investors

JEL Classification: D8, G10

Suggested Citation

Baltakys, Kęstutis and Baltakienė, Margarita and Kärkkäinen, Hannu and Kanniainen, Juho, Neighbors Matter: Geographical Distance and Trade Timing in the Stock Market (July 3, 2018). Available at SSRN: https://ssrn.com/abstract=3207223 or http://dx.doi.org/10.2139/ssrn.3207223

Kęstutis Baltakys (Contact Author)

Tampere University of Technology ( email )

P.O. 541, Korkeakoulunkatu 8 (Festia building)
Tampere, FI-33101
Finland

Margarita Baltakienė

Tampere University of Technology ( email )

P.O. 541, Korkeakoulunkatu 8 (Festia building)
Tampere, FI-33101
Finland

Hannu Kärkkäinen

Tampere University of Technology ( email )

P.O. 541, Korkeakoulunkatu 8 (Festia building)
Tampere, FI-33101
Finland

Juho Kanniainen

Tampere University of Technology ( email )

P.O. 541, Korkeakoulunkatu 8 (Festia building)
Tampere, FI-33101
Finland

HOME PAGE: http://https://sites.google.com/site/juhokanniainen/

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