Proximity and Pricing (Nærhed og prissætning)

Abstract:

The proposal analyses how businesses' geographic location can impact their stock price. The businesses' general lack of physical contact with investors can keep the latter from acquiring 'sensitive' information (face-to-face data) about businesses. Such information barriers makes investment more risky, and facilitates a lowering of price of stock to compensate investors for taking this risk – which makes the issuing of stock more expensive and therefore relatively less attractive for businesses. The project proposes that geographic data is used to study how information barriers affect pricing when new stock is issued.