What's in a Name? An Experimental Examination of Investment Behavior |
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Authors: | Lucy F Ackert Bryan K Church James Tompkins and Ping Zhang |
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Institution: | (1) Michael J. Coles College of Business, Kennesaw State University, USA;(2) College of Management, Georgia Tech, USA;(3) Rotman School of Management, University of Toronto, Canada |
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Abstract: | A fundamental unresolved issue is whether information asymmetries underlie investors predisposition to invest close to home (i.e., domestically or locally). We conduct experiments in the United States and Canada to investigate agents portfolio allocation decisions, controlling for the availability of information. Providing participants with information about a firms home base, without disclosing its specific identity, is not sufficient to change investment behavior. Rather, participants need to know a firms name and home base. Additional evidence indicates that participants have a greater perceived familiarity with local and domestic securities and, in turn, invest more in such securities.The authors thank Ann Gillette, Josef Zechner (the editor), and two anonymous referees for helpful comments and acknowledge the financial support of the Federal Reserve Bank of Atlanta, Georgia Tech, and Social Sciences and Humanities Research Council of Canada. The views expressed here are those of the authors and not necessarily those of the Federal Reserve Bank of Atlanta or the Federal Reserve System. |
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