The Firm Next Door : Using Satellite Images to Study Local Information Advantage

Research output: Journal Publications and ReviewsRGC 21 - Publication in refereed journalpeer-review

22 Scopus Citations
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Author(s)

Detail(s)

Original languageEnglish
Pages (from-to)713-750
Journal / PublicationJournal of Accounting Research
Volume59
Issue number2
Online published30 Mar 2021
Publication statusPublished - May 2021
Externally publishedYes

Abstract

We use novel satellite data that track the number of cars in the parking lots of 92,668 stores for 71 publicly listed U.S. retailers to study the local information advantage of institutional investors. We establish car counts as a timely measure of store-level performance and find that institutional investors adjust their holdings in response to the performance of local stores, and that these trades are profitable on average. These results suggest that local investors have an advantage when processing information about nearby operations. However, some institutional investors do not adjust for the quality of their local information and continue to rely on local signals even when they are poor predictors of firm performance and returns. This overreliance on poor local information is reduced for institutional investors with greater industry expertise and those with greater incentives to maximize short-term trading profits. © University of Chicago on behalf of the Chookaszian Accounting Research Center, 2021

Research Area(s)

  • alternative data, big data, emerging technologies, institutional investors, local advantage, overweighting, processing costs, satellite images, store-level performance

Citation Format(s)

The Firm Next Door: Using Satellite Images to Study Local Information Advantage. / KANG, Jung Koo; STICE-LAWRENCE, Lorien; WONG, Yu Ting Forester.
In: Journal of Accounting Research, Vol. 59, No. 2, 05.2021, p. 713-750.

Research output: Journal Publications and ReviewsRGC 21 - Publication in refereed journalpeer-review