VGSF - WU Vienna - LC

Clemens Wagner, VGSF, Vienna University of Economics and Business (WU Wien)

Campus WU TC.5.04 and via MS Teams 14:00 - 15:00

Organizer WU Vienna

The Fin­ance Brown Bag Sem­inar is held by the In­sti­tute for Fin­ance, Bank­ing and In­sur­ance (WU Vi­enna) and the Vi­enna Gradu­ate School of Fin­ance (VGSF). It serves as a present­a­tion plat­form for PhD stu­dents, fac­ulty mem­bers, and vis­it­ors. An over­view of BBS on the web­site of the In­sti­tute for Fin­ance, Bank­ing and In­sur­ance.


Clemens Wag­ner, VGSF, Vi­enna Uni­versity of Eco­nom­ics and Busi­ness (WU Wien)

Local Re­turns and Be­liefs about the Stock Mar­ket

(with To­bin Hanspal)

This study doc­u­ments how in­vestors ex­tra­pol­ate from re­cent stock re­turns of loc­ally headquartered firms when form­ing be­liefs about ag­greg­ate stock mar­ket out­comes. Con­sist­ent with stud­ies on the equity home bias, we find that the re­spons­ive­ness to local in­form­a­tion is a func­tion of prox­im­ity. While in­vestors may feel more com­fort­able in­ter­pret­ing local in­form­a­tion, we find no evid­ence that these ef­fects are sens­it­ive to the in­form­at­ive­ness of local re­turns for the ag­greg­ate out­come. Our find­ings sug­gest that dif­fer­ences in be­liefs about the in­form­a­tion con­tained in pub­lic sig­nals vary sys­tem­at­ic­ally with geo­graph­ical dis­tance, which has been sug­ges­ted as an im­port­ant driver of the local bias in equity mar­kets.

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