Geographic dispersion and stock returns

Diego García and Oyvind Norli ()

Journal of Financial Economics, 2012, vol. 106, issue 3, 547-565

Abstract: This paper shows that stocks of truly local firms have returns that exceed the return on stocks of geographically dispersed firms by 70 basis points per month. By extracting state name counts from annual reports filed with the Securities and Exchange Commission (SEC) on Form 10-K, we distinguish firms with business operations in only a few states from firms with operations in multiple states. Our findings are consistent with the view that lower investor recognition for local firms results in higher stock returns to compensate investors for insufficient diversification.

Keywords: Geography; Geographic dispersion; Location; Local; Stock returns (search for similar items in EconPapers)
JEL-codes: G11 G12 G14 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (144)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:106:y:2012:i:3:p:547-565

DOI: 10.1016/j.jfineco.2012.06.007

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