Companies located in more economically troubled states
provide a greater opportunity for investors than companies in other states
according to new research from the School’s Department of Finance. The study reveals that investors in states
with high unemployment and a relatively depressed housing sector tend to sell
more stocks during these tough economic times, and because people invest
disproportionately in companies close to home, the stock prices of firms in
those states suffer disproportionately.
The research, to be published in the June issue of the
Journal of Finance and featured in a May
13 article in The Wall Street Journal, finds that these firms underperform for
a few successive quarters, providing a buying opportunity.