Social distancing and local bias

This study investigates the effect of social distancing on the local bias of institutional investors. Using SafeGraph's Social Distancing Metrics data and SEC's EDGAR 13F filings, we find that stay-at-home duration ratio decreases institutional investors' local holdings and firms' institutional ownership in the U.S. We also exploit the lockdown orders across various states during the COVID-19 pandemic as exogenous shocks to conduct the stacked regression estimation, which yields a similar result. Our channel analysis using abnormal return indicates that social distancing mitigates local bias by constraining the information advantage of local investors rather than alleviating their cognitive bias. © 2022 Elsevier Inc.

Sustainable institutional investment in the COVID-19 pandemic

This article examines institutions' investment strategies towards environmental and social (E&S) stocks in the first quarter of 2020, coinciding with the COVID-19 pandemic outbreak. Backed with both institutional- and firm-level analyses, we find that institutional investors shift towards stocks with higher E&S performance. The high E&S portfolios exhibit lower risk and return characteristics, outperforming (underperforming) their peers on market-down (-up) days. Further analysis shows this shift towards E&S is not a permanent transition, rather it reversed with the market rebound in the second quarter, thereby suggesting that the underlying driver of institutional E&S investment strategy in the pandemic is downside-risk protection. JEL Classification: G01, G12, G23, M14 © The Author(s) 2022.

Social distancing and local bias

This study investigates the effect of social distancing on the local bias of institutional investors. Using SafeGraph’s Social Distancing Metrics data and SEC’s EDGAR 13F filings, we find that stay-at-home duration ratio decreases institutional investors’ local holdings and firms’ institutional ownership in the U.S. We also exploit the lockdown orders across various states during the COVID-19 pandemic as exogenous shocks to conduct the stacked regression estimation, which yields a similar result. Our channel analysis using abnormal return indicates that social distancing mitigates local bias by constraining the information advantage of local investors rather than alleviating their cognitive bias.