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Keeping Up with the Joneses and the Home Bias

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Author Info

  • Beni Lauterbach
  • Haim Reisman

Abstract

"We argue that when individuals care about their consumption relative to that of their neighbours, a home bias emerges, that is investors overweight domestic stocks in their portfolios. Domestic stocks are preferred because they also serve the objective of mimicking the economic fortunes and welfare of the investor's neighbours, countrymen, and social reference group. We also demonstrate that globalization mitigates the home bias, and derive a modified international CAPM." Copyright Blackwell Publishers Ltd, 2004.

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File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1354-7798.2004.00248.x
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Bibliographic Info

Article provided by European Financial Management Association in its journal European Financial Management.

Volume (Year): 10 (2004)
Issue (Month): 2 ()
Pages: 225-234

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Handle: RePEc:bla:eufman:v:10:y:2004:i:2:p:225-234

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Cited by:
  1. Gomez, Juan-Pedro, 2007. "The impact of keeping up with the Joneses behavior on asset prices and portfolio choice," Finance Research Letters, Elsevier, vol. 4(2), pages 95-103, June.
  2. Juan Pedro Gomez, 2005. "An International Capm With Consumption Externalities And Non-Financial Wealth," Working Papers Economia wp05-08, Instituto de Empresa, Area of Economic Environment.
  3. Johansson, Anders C. & Ljungwall, Christer, 2009. "Spillover Effects Among the Greater China Stock Markets," World Development, Elsevier, vol. 37(4), pages 839-851, April.
  4. Abdallah, Wissam & Goergen, Marc, 2008. "Does corporate control determine the cross-listing location?," Journal of Corporate Finance, Elsevier, vol. 14(3), pages 183-199, June.

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