Title: Neighbors matter: Geographical distance and trade timing in the stock market
Authors: Kestutis Baltakys - Tampere University of Technology (Finland)
Margarita Baltakiene - Tampere University of Technology (Finland) [presenting]
Hannu Karkkainen - Tampere University of Technology (Finland)
Juho Kanniainen - Tampere University of Technology (Finland)
Abstract: In financial markets, investors are socially connected and have access to overlapping sources of information. Many investor groups have similar trading strategies because of the common information sources or the ability to share the knowledge with each other. As a result, neighboring investors may exchange information about their transactions in stock markets, leading to similar trading behavior. We find that pairwise trade timing similarities between investor pairs are negatively associated to the geographical distance between corresponding investor pairs. This suggests that local information transfer channels between neighboring individual investors are used in decision making. We also observe that differences in age and language moderate this association. The analysis is conducted using investor account level data from different regions of Finnish households.