The Geography of Investor Attention

Local companies attract significantly more attention from investors than nonlocalcompanies, especially in coincidence with news releases and high volatility. At tention is causally related to perceived proximity: first, attention towards firmsacquired by nonlocal bidders drops more in their own than in the bidder’s state;second, COVID-19 travel restrictions correlate with a drop in relative attention tononlocal companies, especially in locations with fewer flights after the outbreak.Finally, local attention predicts volatility, bid-ask spreads, and nonlocal attention,but not vice-versa. These findings suggest that the geography of attention is shapedby local investors’ information-processing advantage, not familiarity bias.