Retail Investor Information Demand - Speculating and Investing in Structured Products
European Journal of Finance (Forthcoming)
38 Pages Posted: 27 Feb 2013 Last revised: 1 Mar 2015
Date Written: February 10, 2015
Abstract
We study the impact of retail investor information demand on trading in bank-issued investment and leverage structured products, which are specifically designed for retail investors. Stock-specific information demand positively predicts speculative trading activity. Further, we find a positive relationship between market-wide information demand and order aggressiveness and order uncertainty for speculating and investing activity. Whereas information supply is associated with speculative long positions, information demand does not induce investors to be predominantly long or short. Finally, we do not find retail investor information demand to contribute to an upward price pressure on security prices. In contrast, information supply exerts negative price pressure. Overall, retail investor trading in individual stocks is much more strongly influenced by market-wide information instead of firm-specific information demand. This implies a low informational efficiency of retail investor speculation and investing activity.
Keywords: Retail Investors, Structured Products, Google Insights, Behavioral Finance, Information Discovery
JEL Classification: G10, G14
Suggested Citation: Suggested Citation
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