TY - JOUR
T1 - Information diffusion effects in individual investors' common stock purchases
T2 - Covet thy neighbors' investment choices
AU - Ivković, Zoran
AU - Weisbenner, Scott
PY - 2007/6
Y1 - 2007/6
N2 - We study the relation between households stock purchases and stock purchases made by their neighbors. A ten percentage point increase in neighbors purchases of stocks from an industry is associated with a two percentage point increase in households own purchases of stocks from that industry. The effect is considerably larger for local stocks and among households in more social states. Controlling for area sociability, households and neighbors investment style preferences, and the industry composition of local firms, we attribute approximately one-quarter to one-half of the correlation between households stock purchases and stock purchases made by their neighbors to word-of-mouth communication.
AB - We study the relation between households stock purchases and stock purchases made by their neighbors. A ten percentage point increase in neighbors purchases of stocks from an industry is associated with a two percentage point increase in households own purchases of stocks from that industry. The effect is considerably larger for local stocks and among households in more social states. Controlling for area sociability, households and neighbors investment style preferences, and the industry composition of local firms, we attribute approximately one-quarter to one-half of the correlation between households stock purchases and stock purchases made by their neighbors to word-of-mouth communication.
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U2 - 10.1093/revfin/hhm009
DO - 10.1093/revfin/hhm009
M3 - Article
AN - SCOPUS:34547817657
SN - 0893-9454
VL - 20
SP - 1327
EP - 1357
JO - Review of Financial Studies
JF - Review of Financial Studies
IS - 4
ER -