Neighbors matter: Geographical distance and trade timing in the stock market

Baltakys, Kęstutis; Baltakienė, Margarita; Kärkkäinen, Hannu; Kanniainen, Juho

doi:10.1016/j.frl.2018.11.013

Cited by 14 publications

(13 citation statements)

References 24 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…In this regard, a meta-analysis study based on 701 language effects collected from 81 academic articles, found that a common language increases the flow of trade by 44% (Egger & Lassmann, 2012). Moreover, Baltakys et al (2019) showed that investor pairs in Finland who speak the same language have more trade timing similarities than pairs who speak different languages. In a study of 115 countries, Oh et al (2011) found that speaking a common official language increases imports by 43%.…”

Section: Literature Reviewmentioning

confidence: 99%

Evaluating the effects of language on international trade in MENA countries: A gravity-model approach

Rehimzadeh

Ebrahimi

2021

jrems

View full text Add to dashboard Cite

Prior studies have investigated the role of economic and noneconomic variables on international trade. A major factor, which has been studied less, is the language used in transactions and negotiations. We explore the effects of language connectedness and the Arabic language on international trade in thirteen countries in the Middle East and North Africa (MENA) region. We used a panel of bilateral data and gravity model for the countries of the region over the 2000 to 2018 period. Our analytic technique was the Poisson pseudo-maximum-likelihood (PPML) estimation method. The empirical outcomes indicate that speaking Arabic leads to an increase in export, that is, Arab nations prefer to export to the countries whose people speak their language. In addition, the language connectedness index, which depends on the extent to which the country's languages are spoken outside the country, is positively associated with the levels of exports and imports. Results further show that the GDP, population of the destination country, and political co-stability have significant positive impacts on the bilateral exports. Additionally, GDP, the population of the source country, political co-stability, and a common border have had significant positive influences on bilateral imports. The major contribution of this research is that the Arabic language has a significant and positive impact on trade among MENA countries.

show abstract

Section: Literature Reviewmentioning

confidence: 99%

Evaluating the effects of language on international trade in MENA countries: A gravity-model approach

Rehimzadeh

Ebrahimi

2021

jrems

View full text Add to dashboard Cite

show abstract

Section: Datasetmentioning

confidence: 99%

“…Because investors seek higher returns, one possibility is to use social networks and other private information channels to follow other investors' strategies and to exploit privately channelled information in stock markets. Recently, [10] provided evidence of the negative relationship between distance and trade timing similarity for household investors, indicating that face-to-face communication is still important in financial decision making. According to [11], information links can be identified from realised trade because investors who are directly linked in the information network tend to time their transactions similarly.…”

Section: Introductionmentioning

confidence: 99%

Clusters of Investors Around Initial Public Oﬀering

et al. 2019

Self Cite

View full text Add to dashboard Cite

The complex networks approach has been gaining popularity in analysing investor behaviour and stock markets, but within this approach, initial public offerings (IPO) have barely been explored. We fill this gap in the literature by analysing investor clusters in the first two years after the IPO filing in the Helsinki Stock Exchange by using a statistically validated network method to infer investor links based on the co-occurrences of investors' trade timing for 14 IPO stocks. Our findings show that a rather large part of statistically similar network structures is persistent and general: they form in different securities' and persist in time for mature and IPO companies. We also find evidence of institutional herding that hints at the existence of an investor information network. * Corresponding author 1 arXiv:1905.13508v1 [q-fin.TR] 31 May 2019 trade because investors who are directly linked in the information network tend to time their transactions similarly. We follow this idea and use observations on investor-level transactions from shareholder registration data to identify the links between investors, here with a special focus on identifying investor clusters. Prior studies have investigated the structures of investor networks in different contexts [11,12,13,14,9,15], but investor clusters around IPOs have barely been explored.We address this research gap by performing a broad multistock exploratory analysis of investor clusters over 14 stocks in the first two years of their IPO. In particular, we seek to establish whether the identified investor clusters are persistent over the first two years of the IPOs and appear across multiple IPO securities, as well as with existing, mature stocks in the market. Our analysis unveils one property of a financial market: we detect statistically robust investor clusters that form simultaneously in various securities and that persist over time.Most of the earlier papers perform analyses on an aggregated category level [4,16,17,18] or concentrate on a single highly liquid stock [12,14]. Even though this type of analysis might include nearly all market participants interconnecting in a giant subsystem, the results do not generalise the collective market strategies but instead are rather stock specific. In contrast to previous research in the IPO literature, the current study is the first one on early-stage trading behaviour patterns on an individual investor account level. On the other hand, in opposition to the existing research on investor networks, in the current paper, instead of focusing of heavily capitalised stocks we analyse collective investor trading strategies that emerge after IPOs in the Helsinki Stock Exchange (HSE).With the growing amounts of data and the availability of new datasets, the network theory has become a popular approach in analysing financial complex systems (e.g., [19]). Notwithstanding the high interest in the market structure, investor networks and the complexity of investor behavioural interrelationships remain weakly explored. Indeed, high p...

show abstract

“…Because investors seek higher returns, one possibility is to use social networks and other private information channels to follow other investors' strategies and to exploit privately channelled information in stock markets. Recently, Baltakys et al (2018a) provided evidence of the negative relationship between distance and trade timing similarity for household investors, indicating that face-to-face communication is still important in financial decision making. According to Ozsoylev et al (2013), information links can be identified from realised trades because investors who are directly linked in the information network tend to time their transactions similarly.…”

Section: Introductionmentioning

confidence: 99%

“…So to avoid inconsistencies in the results, we eliminated nominee transactions from our analysis. This dataset has been also analysed and described in previous research (e.g., Ilmanen and Keloharju, 1999;Baltakys et al, 2018aBaltakys et al, , 2018bRanganathan et al, 2018;Siikanen et al, 2018).…”

Section: Introductionmentioning

confidence: 99%

Clusters of investors around initial public offering

et al. 2019

Self Cite

View full text Add to dashboard Cite

The complex networks approach has been gaining popularity in analysing investor behaviour and stock markets, but within this approach, initial public offerings (IPOs) have barely been explored. We fill this gap in the literature by analysing investor clusters in the first two years after the IPO filing in the Helsinki Stock Exchange by using a statistically validated network method to infer investor links based on the co-occurrences of investors' trade timing for 69 IPO stocks. Our findings show that a rather large part of statistically similar network structures form in different securities and persist in time for mature and IPO companies. We also find evidence of institutional herding.International Securities Identification Number (ISIN), company, industry, total number of transactions, total number of unique investors and the IPO day of the security. ISINs from the error-free set are marked in bold PALGRAVE COMMUNICATIONS | https://doi.

show abstract

Neighbors matter: Geographical distance and trade timing in the stock market

Cited by 14 publications

References 24 publications

Evaluating the effects of language on international trade in MENA countries: A gravity-model approach

Evaluating the effects of language on international trade in MENA countries: A gravity-model approach

Clusters of Investors Around Initial Public Oﬀering

Clusters of investors around initial public offering

Contact Info

Product

Resources

About