Proximity-powered attention: Exploring spatial spillover in investor attention

This paper examines the transmission of investor attention between firms based on geographical proximity and product market similarity using EDGAR search traffic data. We find that firms receive more attention when a nearby firm experiences abnormal attention, with the effect decreasing with distance and over time. The effect is stronger for firms in similar product markets. Effects are most concentrate among nearby firms, with attention increases exceeding 86% for very similar markets, dropping to 41% as distance increases. This research extends the literature on investor attention and local information bias, highlighting the importance of peer firm relationships in information transmission. • Investigates whether attention shifts between firms after abnormal attention occurs. • Combines proximity and product similarity in the analysis of EDGAR data. • Spillover effects can boost attention by up to 86% and last several days. • Firms are more affected when close firms receive abnormal attention. • Effects on investor attention are stronger in similar product markets.