This paper analyzes explicit buy recommendations for stocks published by German Personal Finance Magazines from 1995 to 2003. These recommendations earn significant abnormal returns of 2.58% within the five days around the publication day. Both the price-pressure hypothesis and the information hypothesis can be confirmed by our data. The price-pressure effect is most evident for small stocks and glamour stocks. However, whereas the initial price reaction to small stocks is additionally driven by permanent information value, this does not hold true for glamour stocks. In contrast, value stocks are associated with high cumulative abnormal returns that are solely driven by information value.

We develop a novel framework to evaluate the quality of academic finance conferences. In particular, we analyze the publication and citation outcomes of 18,535 conference papers presented at 15 academic finance conferences between 2007 and 2012. In addition, we provide evidence of the perceived quality of these academic finance conferences by surveying a large number of participants of the 15 conferences. The use of three different quality proxies enables us to contrast levels of conference quality based on the quality of presented papers to levels of conference quality perceived by conference participants. Our results reveal two quality clusters of academic finance conferences and show that the use of the three quality dimensions, while generally robust, is associated with a number of peculiarities.

Homophily—individuals’ affinity for others like them—is a powerful principle that governs whose opinions people attend to. Using nearly 2, 400 advisory meetings, we find that homophily has a significant positive impact on the likelihood of following financial advice. The increased likelihood of following stems from homophily on gender and age for male clients and from sameness on marital and parental status for female advisees. Moreover, the homophily effect is mitigated by reduced information asymmetry between client and advisor and a long-term relationship with the bank. Our results suggest that client-advisor matching increases individuals’ propensity to follow financial advice. Received June 21, 2017; editorial decision June 7, 2018 by Editor Philip Strahan.

Extant literature consistently documents that investors tilt their domestic equity portfolios towards regionally close stocks (local bias). We hypothesize that individual investors’ local bias is not limited to the domestic sphere but instead also determines their international investment decisions. Our results confirm the presence of a cross-border local bias. Specifically, we show (i) that the stockholdings of individual investors living within regional proximity to a foreign country display a significantly lower foreign investment bias towards investment opportunities in that country and (ii) that this drop in foreign investment bias levels is disproportionately driven by investments in regionally close neighbor-country companies. The impact of cross-border local bias on investors’ bilateral foreign equity investments is economically significant and holds even after controlling for previously identified explanations of international asset allocation.