Location choice, portfolio choice

• 成果类型: Article
• 署名作者: Branikas, Ioannis; Hong, Harrison; Xu, Jiangmin
• 署名单位: University of Oregon; Columbia University; Peking University
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2019.10.010
• 发表日期: 2020
• 页码: 74-94
• 关键词: location choice; portfolio choice; household finance; Local bias; Selection correction

摘要

Households hold undiversified stock portfolios of firms headquartered near their city of residence. Leading explanations assign a causal role for proximity. The literature neglects that distance is endogenous. Households may locate based on unobservables such as optimism about a city's economic prospects, which can be correlated with latent local-stock demand. We use location-choice models to account for this selection. We propose as instruments that older households prefer to locate in recreational areas for non-pecuniary reasons. Our analysis based on a widely used household data set yields significantly smaller estimates for proximity in determining portfolio choice compared to those in the literature. (C) 2020 Elsevier B.V. All rights reserved.