Melbourne Accounting Research Seminar - Dr Yu Ting Forester Wong

Melbourne Accounting Research Seminar

Deans Boardroom, level 12, The Spot
198 Berkeley St, Carlton

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Mario Schabus

mario.schabus@unimelb.edu.au

T: +61 3 8344 0218

Dr Yu Ting Forester Wong from The University of South Carolina will present a MARS seminar.

Topic: Attention, Acquisition Costs, or Executive Information? Using Big Data to Uncover the Sources of Local Information

Abstract: We use novel satellite data which tracks the number of cars in the parking lots of approximately 100,000 stores for 76 publicly listed U.S. retailers over the years 2009 to 2018 to disentangle the sources of local information. We establish car counts as a timely measure of the performance of individual stores and show that local institutional investors appear to trade in the same direction as this information. Most importantly, we disentangle the extent to which local investors obtain this information through: decreased costs of information acquisition for local investors (“Acquisition Cost Channel”), information directly obtained from firm management (“Executive Information Channel”), or increased attention (“Increased Attention Channel”). Our tests provide strong evidence in support of the acquisition cost channel, especially for regions that are difficult to gather information about from a distance and regions where social networks are especially tightknit. In contrast, we find only weak evidence of the increased attention channel and no evidence of the executive information channel. In an era when the common perception is that “the world is flat” and the costs to acquire information are decreasing, we find these results surprising and important to consider when making policy decisions about how or whether to close this gap.