TY - JOUR
T1 - Attention-Induced Trading and Returns
T2 - Evidence from Robinhood Users
AU - Barber, Brad M.
AU - Huang, Xing
AU - Odean, Terrance
AU - Schwarz, Christopher
N1 - Publisher Copyright:
© 2022 the American Finance Association.
PY - 2022/12
Y1 - 2022/12
N2 - We study the influence of financial innovation by fintech brokerages on individual investors’ trading and stock prices. Using data from Robinhood, we find that Robinhood investors engage in more attention-induced trading than other retail investors. For example, Robinhood outages disproportionately reduce trading in high-attention stocks. While this evidence is consistent with Robinhood attracting relatively inexperienced investors, we show that it is also driven in part by the app's unique features. Consistent with models of attention-induced trading, intense buying by Robinhood users forecasts negative returns. Average 20-day abnormal returns are −4.7% for the top stocks purchased each day.
AB - We study the influence of financial innovation by fintech brokerages on individual investors’ trading and stock prices. Using data from Robinhood, we find that Robinhood investors engage in more attention-induced trading than other retail investors. For example, Robinhood outages disproportionately reduce trading in high-attention stocks. While this evidence is consistent with Robinhood attracting relatively inexperienced investors, we show that it is also driven in part by the app's unique features. Consistent with models of attention-induced trading, intense buying by Robinhood users forecasts negative returns. Average 20-day abnormal returns are −4.7% for the top stocks purchased each day.
UR - https://www.scopus.com/pages/publications/85138073973
U2 - 10.1111/jofi.13183
DO - 10.1111/jofi.13183
M3 - Article
AN - SCOPUS:85138073973
SN - 0022-1082
VL - 77
SP - 3141
EP - 3190
JO - The Journal of Finance
JF - The Journal of Finance
IS - 6
ER -