Neighbors matter: Geographical distance and trade timing in the stock market

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    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.

    Original languageEnglish
    JournalFinance Research Letters
    Early online date2018
    DOIs
    Publication statusPublished - 2018
    Publication typeA1 Journal article-refereed

    Keywords

    • Behavioral economics
    • Behavioral finance
    • Geographical distance
    • Individual investors
    • Information transfer
    • Investor network
    • Investor trading
    • Private information
    • Social interactions
    • Social networks

    Publication forum classification

    • Publication forum level 1

    ASJC Scopus subject areas

    • Finance

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