Distance still makes a difference

Distance still makes a difference

Many people think modern technology is so amazing that information asymmetry due to distance differences could almost be ignored. The fact shows something different. Volkswagen’s scandal has hurt most investors very hard; however, the German institutional investors lost little during this crisis, as they only held 2.1 per cent of Volkswagen’s capital at the end of last year, while the 26.3 per cent was held by the foreign institutions. This shows the German investors are more aware of what is happening inside the company compared with the foreign investors. Modern technology has made our communication so much easier; however, a long distance still requires more time to achieve the same effect in a short distance. Therefore, people in a long distance usually filter their information in order to improve their efficiency, meanwhile such filtration may put some important information aside.