Home bias and local equity portfolio decisions of Chinese insurance institutional investors

Our paper explores whether Chinese insurance companies exhibit a local preference in deciding their equity portfolios and the incentive of this preference. Our research finds that Chinese insurance institutional investors significantly tilt to invest in local firms geographically close to them, and...

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Bibliographic Details
Published in:	PloS one 2023-07, Vol.18 (7), p.e0288250-e0288250
Main Authors:	Yang, Shanshan, He, Na, Yu, Haizong
Format:	Article
Language:	eng
Subjects:	Behavior Bias Biology and Life Sciences Computer and Information Sciences Decision analysis Decision making Earth Sciences Efficiency Engineering and Technology Equity Financial institutions Geography Globalization Hypotheses Institutional investments Insurance Insurance companies Insurance industry Investments Investor relations Management Methods People and Places Portfolio investments Portfolio management Preferences Securities markets Social Sciences Stock exchanges
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Summary:	Our paper explores whether Chinese insurance companies exhibit a local preference in deciding their equity portfolios and the incentive of this preference. Our research finds that Chinese insurance institutional investors significantly tilt to invest in local firms geographically close to them, and local investments do not significantly outperform non-local investments. The results indicate that the behavioral aspect of home bias, rather than information advantage, play a more significant role in deciding equity holdings of China's insurance companies. Additionally, local equity preference is more pronounced in dialect-segmented areas and life insurance firms. This paper incorporates hometown identification into the analysis framework of insurance companies' portfolio decision-making and enriches the research of their investing strategies from the perspective of behavioral finance.
ISSN:	1932-6203 1932-6203