Portfolio diversification and city agglomeration
By: William N. Goetzmann, Massimo Massa, Andrei Simonov.
Contributors: Massa, Massimo.; Simonov, Andrei, 1964-; National Bureau of Economic Research.
Series: NBER working paper series ;; working paper 10343; Working paper series (National Bureau of Economic Research : Online) ;; working paper no. 10343.
Publisher: National Bureau of Economic Research
Published: 2004
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Subjects: Stockholders -- Sweden.; Portfolio management -- Sweden.; Cities and towns -- Sweden.
Description: "We relate the degree of investor portfolio focus to the broader urban economic context of the household.  Using a detailed panel of investors in Sweden over the period 1995 to 2000, we find that the level of investor diversification, as measured by number of stocks in the portfolio and by the average correlation among holdings, is partially explained by city industrial characteristics.  We find that rural portfolios are more diversified than urban portfolios and that portfolio diversification is characterized by factors associated with urban growth.  We consider a number of theories to explain investor focus, including behavioral biases, real and perceived informational advantage, local social competition and hedging of non-tradable risk.  We find little evidence to support social and hedging motives to explain the lack of portfolio diversification, and some evidence in favor of perceived informational advantage in an urban setting.  We attribute this evidence as support for the broader 'knowledge spillover' processes documented in the recent urban economics literature.  Portfolio effects may be added to the list of factors that define and differentiate urbanism"--National Bureau of Economic Research web site.
Notes: Includes bibliographical references.
Title from PDF file as viewed on 1/19/2005.
Also available in print.
System requirements: Adobe Acrobat Reader.
Mode of access: World Wide Web.