The Geography of Investor Attention

Stefano Mengoli, Marco Pagano and Pierpaolo Pattitoni

CSEF Working Papers from Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy

Abstract: Local companies attract significantly more attention from investors than nonlocal companies, especially at times of news releases and high volatility. This attention gap widens especially when news is firm-specific rather than aggregate, and in response to idiosyncratic rather than market risk. Attention is causally related to perceived proximity: after a firm is acquired by a nonlocal one, local investors re-allocate attention away from it more than nonlocal investors; conversely, COVID-19travel restrictions led investors to reallocate attention towards local companies and away from nonlocal ones, especially those harder to reach. Finally, local attention predicts volatility, bid-ask spreads, and nonlocal attention, but not vice versa. Our findings suggest that the geography of attention matters and is shaped by local investors’ information-processing advantage, not familiarity bias.

Keywords: attention; local investors; distance; familiarity; news; liquidity; volatility. (search for similar items in EconPapers)
JEL-codes: D83 G11 G12 G14 G50 L86 R32 (search for similar items in EconPapers)
Date: 2021-11-22, Revised 2024-03-27
New Economics Papers: this item is included in nep-cwa, nep-mst and nep-ure
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.csef.it/WP/wp630.pdf (application/pdf)

Related works:
Journal Article: The Geography of Investor Attention (2025)
Working Paper: The Geography of Investor Attention (2021)
Working Paper: The Geography of Investor Attention (2021)
Working Paper: The geography of investor attention (2021)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sef:csefwp:630

Access Statistics for this paper

More papers in CSEF Working Papers from Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy Contact information at EDIRC.
Bibliographic data for series maintained by Dr. Maria Carannante ().