Do investors buy what they know? Product market choices and investment decisions

Matti Keloharju, Samuli Knüpfer, Juhani Linnainmaa

Research output: Contribution to journalArticleScientificpeer-review

42 Citations (Scopus)


This article shows that individuals' product market choices influence their investment decisions. Using microdata from the brokerage and automotive industries, we find a strong positive relation between customer relationship, ownership of a company, and size of the ownership stake. Investors are also more likely to purchase and less likely to sell shares of companies they frequent as customers. These effects are stronger for individuals with longer customer relationships. A merger-based natural experiment supports a causal interpretation of our results. We also find evidence of causality in the other direction: inheritances and gifts have an effect on individuals' patronage decisions. A setup in which customer-investors regard stocks as consumption goods, not just as investments, seems to best explain our results.
Original languageEnglish
Pages (from-to)2921-2958
JournalReview of Financial Studies
Issue number10
Publication statusPublished - 2012
MoE publication typeA1 Journal article-refereed


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