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Full-Text Articles in Business
Trust And Local Bias, Chi Shen Wei, Lei Zhang
Trust And Local Bias, Chi Shen Wei, Lei Zhang
Research Collection Lee Kong Chian School Of Business
This paper examines the effect of social trust on local bias. Our evidence suggests that institutional investors located in high-trust regions of the United States exhibit lower local bias. Moreover, we find that high-trust investors are better diversified, suggesting that trust helps accomplish greater diversification. The results are not due to firm, demographic, or local economic characteristics. Additional analysis reveals that the documented informational advantage in local holdings exists only in low-trust regions. We show that this finding is consistent with a trust explanation.
Sand States And The Us Housing Crisis, Hyunsoo Choi, Harrison G. Hong, Jeffrey D. Kubik, Jeffrey P. Thompson
Sand States And The Us Housing Crisis, Hyunsoo Choi, Harrison G. Hong, Jeffrey D. Kubik, Jeffrey P. Thompson
Research Collection Lee Kong Chian School Of Business
The excesses of the historic US housing cycle of the 2000s were concentrated in the Metropolitan Statistical Areas (MSAs) of Arizona, California, Florida and Nevada. Even controlling for leading explanations of this housing cycle, these Sand State MSAs had more than double the mortgage originations, defaults and price fluctuations than other MSAs. We show that these excesses can be explained by Sand State MSAs having an abnormally low supply of publicly traded firms headquartered there relative to total income. Households in these MSAs are more likely to purchase investment homes nearby rather than stocks, amplifying the housing cycle there.