Do Individual Investors Have Asymmetric Information Based On Work Experience?

Trond Døskeland and Hans K. Hvide

No 7428, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Using a novel and unique dataset from Norway, we analyze whether professional proximity is associated with asymmetric information and abnormal returns. We find that individuals hold an excess weight in stocks that are professionally close. For example, after excluding holdings of own-company and previous employer stock, investors on average hold 11% of their portfolio in stocks within their two-digit industry of employment. We find no evidence that investments in professionally close stocks are associated with a positive abnormal return in either the short or the long term. In some specifications, we find evidence of a negative abnormal return. We conclude there is no evidence of professional proximity being associated with asymmetric information and abnormal returns.

Keywords: asymmetric information; behavioral finance; familiarity; household finance (search for similar items in EconPapers)
JEL-codes: D83 G11 J24 (search for similar items in EconPapers)
Date: 2009-08
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Journal Article: Do Individual Investors Have Asymmetric Information Based on Work Experience? (2011)
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