PlumX Metrics
Embed PlumX Metrics

Local Investment and the Relationship Between Prices and Earnings

2016
  • 0
    Citations
  • 704
    Usage
  • 0
    Captures
  • 1
    Mentions
  • 0
    Social Media
Metric Options:   Counts1 Year3 Year

Metrics Details

Most Recent News

Expert Advice when Choosing Hard Money Lenders

Hard money lenders have preferred investors seeking credit via collateral as many soft loan lenders can only give minimum credit for a relatively smaller asset.

Thesis / Dissertation Description

This paper examines how local stock ownership influences the relationship between stock prices and future earnings. Prior finance literature has found that local investment leads to superior returns and has suggested that these returns are a result of an informational edge for those who invest locally. However, the literature has yet to examine which types of information local investors have access to and how that impacts the informativeness of stock prices. This paper shows that local investors have access to earnings-relevant information which results in stock prices which better lead future earnings for companies with larger local ownership bases. This phenomenon is more pronounced for companies headquartered away from institutional investors, where local investors are better able to drive the stock price. In addition, I find local investors have been more influential in pricing future earnings in local stocks in recent years as online and individual stock trading has allowed more local information to get priced. Overall, these results indicate that due to their physical closeness local investors are better able to anticipate future earnings than the investing public and can lead to more informative stock prices.

Provide Feedback

Have ideas for a new metric? Would you like to see something else here?Let us know