The Demand for Public Information by Local and Nonlocal Investors: Evidence from Investor-Level Data
Journal of Accounting & Economics (JAE), Forthcoming
47 Pages Posted: 17 Apr 2021
Date Written: April 12, 2021
I examine the demand for public information by local and nonlocal investors. Using novel data on institutional investors’ requests for financial information from the SEC, I document that investors acquire approximately 20% more financial information for their local investments. This pattern holds after controlling for investors’ 13(f) portfolio holdings. I further demonstrate that this pattern is concentrated in stocks eliciting behavioral biases as well as among investors with strong company relationships. Consistent with public information acquisition being more beneficial to local investors, I find that local investors exhibit both enhanced timeliness in acquiring public information and superior portfolio trading decisions when acquiring public information (on the order of 0.5% per quarter). In sum, these results provide evidence that investors demand more, and benefit more from, public information on local investments.
Keywords: Information Demand, EDGAR, Investor Geography, Local Bias
JEL Classification: D82, D83, G11, G12, G14, G20, M40
Suggested Citation: Suggested Citation