Strategies - The Perils of Investing Too Close to Home - NYTimes.com: "
Americans tend to put a disproportionate share of their money into shares of companies based in their own states, new research has shown, and that bias that can be exploited by sophisticated traders.
These insights come from “Long Georgia, Short Colorado? The Geography of Return Predictability,” a study by George M. Korniotis, an economist on the staff of the board of governors of the Federal Reserve, and Alok Kumar, an assistant professor of finance at the University of Texas, Austin."
The actual paper can be found on SSRN.
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