Familiarity Breeds Investment. (22nd June 2015)

• Record Type: Journal Article
• Authors: Huberman, Gur
• Is Part Of: Review of financial studies. Volume 14:Number 3(2001)
• Page Start: 659
• Page End: 680
• Publication Date: 2015-06-22
• Subjects: Finance -- United States -- Periodicals; Finance -- Periodicals; 332
• DOI: 10.1093/rfs/14.3.659
• Languages: English
• ISSNs: 0893-9454

Abstract

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.