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Game hoarding in Europe: Stock-price consequences of local bias?

Research output: Contribution to conferencePaperResearchpeer-review

  • Tom Aabo
  • Christos Pantzalis, Denmark
  • Maja Stoholm Sørensen, Denmark
Hong, Kubik and Stein (JFE 2008) find that the price of a stock in the US is decreasing in the ratio of
the aggregate book value of listed firms in a region to the aggregate personal income in the same region ("RATIO"), an "only-game-in-town" effect. We first replicate the HKS (2008) study using European data and find an opposite effect, a "game-hoarding" effect. We then investigate the underlying factors of RATIO and find that after controlling for differences in origin of law, investor rights, corruption and Euro adoption, neither a game-hoarding effect nor an only-game-in-town effect is strongly supported in the European case. The results are important in understanding the concept of local bias in a crosscountry framework.
Original languageEnglish
Publication year2010
Publication statusPublished - 2010
EventInternational Paris Finance Meeting - Paris, France
Duration: 16 Dec 201016 Dec 2010


ConferenceInternational Paris Finance Meeting

    Research areas

  • Local bias, Only-game-in-town effect, Game-hoarding effect, Europe

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