Your money will reap a greater return if you buy shares in
local companies rather than in companies with wide-spread operations, according
to a study of American joint stock companies.
People who buy and sell shares have a tendency to prefer
national companies over foreign companies. American investors similarly have an
inclination to choose local enterprises rather than companies located far away.
A possible explanation for the great interest in local
companies may be that investors quite simply are more familiar with conditions
in local companies. Increased knowledge about a business should trigger a
greater profit on shares.
Professor Øyvind Norli at BI Norwegian Business School,
together with Associate Professor Diego García at Kenan-Flagler Business
School, University of North Carolina at Chapel Hill, USA, have conducted an
extensive study to see whether there is a connection between a company’s
geographical diversification and the anticipated return on shares in the
company.