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Local bias under natural disasters

Author

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  • Haiqiang Chen
  • Yining Chen
  • Dongxu Li

Abstract

Exploiting account‐level daily stock holding records of over 24,000 retail investors, we show that local investors increase holdings of local stocks more than the nonlocals' in the case of natural disasters. Additional tests suggest that the effect is likely driven by the local investors' information advantage about the intrinsic value of local stocks, navigating them to the underpriced ones and thus achieving superior stock returns. Our study reveals the economic reasoning underlying local biases particularly under natural disasters.

Suggested Citation

  • Haiqiang Chen & Yining Chen & Dongxu Li, 2025. "Local bias under natural disasters," International Review of Finance, International Review of Finance Ltd., vol. 25(1), March.
    • Handle: RePEc:bla:irvfin:v:25:y:2025:i:1:n:e70009
    DOI: 10.1111/irfi.70009
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    1. Ravi, Sai Sudharshan & Löffler, Theresa Sophie & Pina, Eduardo Antonio & Sharma, Shivom & Lepour, Dorsan & Terrier, Cedric & Maréchal, François, 2026. "From servers to services: modeling data centers as heat-active urban energy prosumers," Applied Energy, Elsevier, vol. 402(PB).
    2. Ramtin Sabeti & Thomas Rodding Kjeldsen & Matt Chambers & Hamed Moftakhari & Luis Partida & Ioanna Stamataki & Solomon Simmonds & Rebecca Lee & Barry Hankin & Melissa Hoskings & Katherine Dixon & Jame, 2026. "Modelling Nature-Based Solutions in HEC-RAS," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 40(2), pages 1-20, January.

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