Proximity bias in investors' portfolio choice / Ted Lindblom, Taylan Mavruk, Stefan Sjögren.

Format:

Book

Author/Creator:

Lindblom, Ted, 1956- author.

Mavruk, Taylan, 1977- author.

Sjögren, Stefan, author.

Language:

English

Subjects (All):

Investments--Psychological aspects.

Investments.

Physical Description:

x, 291 pages ; 22 cm

Place of Publication:

Cham, Switzerland : Palgrave Macmillan, [2017]

Summary:

This book helps readers understand the widely documented distortion in the portfolio choice of individual investors toward proximate firms - the proximity bias phenomenon. First, it recapitulates the fundamentals of modern portfolio theory. It then goes on to describe and demonstrate different approaches on how to measure proximity bias and identifies and examines potential motives and reasons for such a bias. In addition, the book presents new analysis on the financial effects of individual investors' proximity bias, explaining and contributing with possible policy implications on their portfolio distortion. This book will be of interest to students and researchers, as well as decision-makers in business firms and households.

Contents:

Introduction

Part I. Portfolio theory, decision-making and market efficiency

Investors' portfolio choice and portfolio theory

Decision-making: rational, bounded, or behavioral

Market efficiency and the standard asset pricing models used to test market efficiency

Part II. Investor behavior, proximity bias and firms' capital structure

The financial behavior of individual investors

The measurement of proximity bias

Motives and reasons for proximity bias

Local bias and capital structure

Part III. The impact of local media, portfolio rebalancing and financial sophistication

Local news and active trading

Portfolio rebalancing by individual investors

The relation between local bias, home bias, and financial sophistication

Conclusions and implications.

Notes:

Includes bibliographical references and index.

ISBN:

9783319547619

3319547615

OCLC:

971361881