Sasin Research Seminar - Racial Integration and Price Efficiency

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Racial Integration and Price Efficiency

By: Gady Jacoby Dean of the Faculty of Management, The University of British Columbia Date: Wednesday, December 17, 2025 Time: 13.00 – 14.00 Venue: Room 201 at Sasin School of Management or online via Zoom Register here to reserve your seat Abstract: This presentation bridges the gap between community sociology and financial economics by examining how Racial Residential Integration (RRI) influences the efficiency of financial markets. While prior research has linked diverse social interactions to improved economic mobility, the impact of community structure on local firms’ stock prices has remained unexplored. Using data on U.S. commuting zones, this research establishes a causal link showing that firms headquartered in more racially integrated communities exhibit significantly higher stock price informativeness and lower information asymmetry. Academically, this work contributes to the literature on social networks in finance by demonstrating that integrated communities facilitate better diffusion of value-relevant “soft” information, thereby reducing the monopolization of private information by specific groups. The study finds that in high-RRI communities, the traditional “home-court advantage” enjoyed by local mutual fund managers—particularly White managers—is significantly eroded. In segregated areas, these managers often generate alpha through exclusive local networks; however, in integrated areas, information flows more freely, leveling the playing field and making stock prices more accurate. For business practitioners and policymakers, these findings suggest that fostering racial integration is not only a social imperative but a mechanism for market efficiency. It implies that investors should be wary of relying on local advantages in integrated markets, and that corporate location plays a subtle but critical role in how effectively a firm’s value is communicated to the market.   For more information please contact +66-2218-4000 ext. 84095 or [email protected].