Discussion paper

DP16747 The Geography of Investor Attention

Retail investors pay over twice as much attention to local companies than non-local ones, based on Google searches. News volume and volatility amplify this attention gap. Attention appears causally related to perceived proximity: first, acquisition by a nonlocal company is associated with less attention by locals, and more by nonlocals close to the acquirer; second, COVID-19 travel restrictions correlate with a drop in relative attention to nonlocal companies, especially in locations with fewer flights after the outbreak. Finally, local attention predicts volatility, bid-ask spreads and nonlocal attention, not viceversa. These findings are consistent with local investors having an information-processing advantage.


Pagano, M, s mengoli and P Pattitoni (2021), ‘DP16747 The Geography of Investor Attention‘, CEPR Discussion Paper No. 16747. CEPR Press, Paris & London. https://cepr.org/publications/dp16747