The Geography of Information Acquisition
Journal of Financial and Quantitative Analysis
81 Pages Posted: 24 Apr 2019 Last revised: 29 Nov 2021
Date Written: November 12, 2019
Using detailed data on company visits by Chinese mutual funds, we provide direct evidence of mutual fund information acquisition activities and the consequent informational advantages mutual funds establish in local firms. Mutual funds are more likely to visit local and nearby firms both in and outside of their portfolios, but the ease of travel between fund and firm locations can substantially alleviate geographic distance constraints. Company visits by mutual funds are strongly associated with both fund trading activities and fund trading performance. Our results show that geographic constraints and costly information acquisition amplify information asymmetry in financial markets.
Keywords: mutual funds, information acquisition, local bias, portfolio choice
JEL Classification: G11, G23
Suggested Citation: Suggested Citation