Origins of Formation Mechanism of Investment Behavior of Home Bias

Abstract

Abstract: Empirical study shows that investors prefer home stock.There are both institutional factors and behavioral factors which
cause the undiversified inverstment.Traditional finance theory suggests that capital controll,risk hedging,information asymmetry and trade costs,etc may arouse the home bias.But the behavioral finance theory shows that familiarity,language and culture,proximateness,relatively optimistic,etc,can explain the home bias.

Key words: home bias, information asymmetry, trade costs, familiarity, relatively optimistic

LIU Feng-Gen. Origins of Formation Mechanism of Investment Behavior of Home Bias[J]. journal6, 2009, 30(3): 120-125.

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