The only game in town
Subtitle: stock-price consequences of local bias
By: Harrison Hong, Jeffrey D. Kubik, Jeremy C. Stein.
Contributors: Kubik, Jeffrey D.; National Bureau of Economic Research.
Series: NBER working paper series ;; working paper 11488; Working paper series (National Bureau of Economic Research : Online) ;; working paper no. 11488.
Publisher: National Bureau of Economic Research
Published: 2005
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Subjects: Stocks -- Prices.; Risk.; Interest.; Industrial location.
Description: "Theory suggests that, in the presence of local bias, the price of a stock should be decreasing in the ratio of the aggregate book value of firms in its region to the aggregate risk tolerance of investors in its region.  We test this proposition using data on U.S.  Census regions and states, and find clear-cut support for it.  Most of the variation in the ratio of interest comes from differences across regions in aggregate book value per capita.  Regions with low population density--e.g., the Deep South--are home to relatively few firms per capita, which leads to higher stock prices via an "only-game-in-town" effect.  This effect is especially pronounced for smaller, less visible firms, where the impact of location on stock prices is roughly 12 percent"--National Bureau of Economic Research web site.
Notes: Includes bibliographical references.
Title from PDF file as viewed on 7/22/2005.
Also available in print.
System requirements: Adobe Acrobat Reader.
Mode of access: World Wide Web.