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Familiarity Breeds Investment

Familiarity Breeds Investment Shareholders of a Regional Bell Operating Company (RBOC) tend to live in the area which it serves, and an RBOC’s customers tend to hold its shares rather than other RBOCs’ equity. The geographic bias of the RBOC investors is closely related to the general tendency of households’ portfolios to be concentrated, of employees’ tendency to own their employers’ stocks in their retirement accounts, and to the home country bias in the international arena. Together, these phenomena provide compeling evidence that people invest in the familiar while often ignoring the principles of portfolio theory. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Review of Financial Studies Oxford University Press

Familiarity Breeds Investment

The Review of Financial Studies , Volume 14 (3) – Jul 1, 2001

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Publisher
Oxford University Press
Copyright
Copyright The Society for Financial Studies 2001
ISSN
0893-9454
eISSN
1465-7368
DOI
10.1093/rfs/14.3.659
Publisher site
See Article on Publisher Site

Abstract

Shareholders of a Regional Bell Operating Company (RBOC) tend to live in the area which it serves, and an RBOC’s customers tend to hold its shares rather than other RBOCs’ equity. The geographic bias of the RBOC investors is closely related to the general tendency of households’ portfolios to be concentrated, of employees’ tendency to own their employers’ stocks in their retirement accounts, and to the home country bias in the international arena. Together, these phenomena provide compeling evidence that people invest in the familiar while often ignoring the principles of portfolio theory.

Journal

The Review of Financial StudiesOxford University Press

Published: Jul 1, 2001

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