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The Geography of Investor Attention

Author

Listed:
  • Stefano Mengoli
  • Marco Pagano
  • Pierpaolo Pattitoni

Abstract

Local companies attract significantly more attention from investors than nonlocal companies, especially at times of news releases and high volatility. This attention gap widens especially when news is firm-specific rather than aggregate, and in response to idiosyncratic rather than market risk. Attention is causally related to perceived proximity: after a firm is acquired by a nonlocal one, local investors, compared with nonlocal investors, are more likely to reallocate attention away from it; conversely, COVID-19 travel restrictions led investors to reallocate attention toward local companies and away from nonlocal ones, especially those difficult to reach. Finally, local attention predicts volatility, bid-ask spreads, and nonlocal attention, but not vice versa. Our findings suggest that the geography of attention matters and is shaped by local investors’ information-processing advantage, not familiarity bias. (JEL D83, G11, G12, G14, L86, R32)

Suggested Citation

  • Stefano Mengoli & Marco Pagano & Pierpaolo Pattitoni, 2025. "The Geography of Investor Attention," The Review of Corporate Finance Studies, Society for Financial Studies, vol. 14(3), pages 752-803.
    • Handle: RePEc:oup:rcorpf:v:14:y:2025:i:3:p:752-803.
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    File URL: http://hdl.handle.net/10.1093/rcfs/cfae016
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    More about this item

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • R32 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Other Spatial Production and Pricing Analysis

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