DP7428 Do Individual Investors Have Asymmetric Information Based On Work Experience?
|Author(s):||Trond Døskeland, Hans K Hvide|
|Publication Date:||August 2009|
|Keyword(s):||asymmetric information, behavioural finance, familiarity, household finance|
|JEL(s):||D83, G11, J24|
|Programme Areas:||Labour Economics, Financial Economics|
|Link to this Page:||www.cepr.org/active/publications/discussion_papers/dp.php?dpno=7428|
Using a novel and unique dataset from Norway, we analyze whether professional proximity is associated with asymmetric information and abnormal returns. We find that individuals hold an excess weight in stocks that are professionally close. For example, after excluding holdings of own-company and previous employer stock, investors on average hold 11% of their portfolio in stocks within their two-digit industry of employment. We find no evidence that investments in professionally close stocks are associated with a positive abnormal return in either the short or the long term. In some specifications, we find evidence of a negative abnormal return. We conclude there is no evidence of professional proximity being associated with asymmetric information and abnormal returns.