May 12, 2003
Smart Money Includes Investment Research by Finance Faculty
Research by two Finance faculty members -- Scott Weisbenner and Zoran Ivkovich -- was cited in an April 14, 2003, online Smart Money "Sturm's Screen" column by Paul Sturm. The smartmoney.com website offers features from the monthly editions of Smart Money magazine.
Ivkovich and Weisbenner's study was cited because of its analysis of local bias. The researchers looked at more than 30,000 investment accounts and discovered that "hometown stocks are significantly overrepresented in individual portfolios -- composing 30% of total assets." The researchers, reported Sturm, concluded that "the local preference seems to be based on information, not just familiarity. Local holdings outperform nonlocal investments by nearly four percentage points annually. Far more if you focus on companies that aren't in the S&P 500."
College of Business
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University of Illinois at Urbana-Champaign
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