Work

Investment transparency and the disposition effect

Year: 2021

Type: article

Abstract: The disposition effect is lower in a trading environment with salient information on current holdings. Using proprietary data from a European fintech platform for social trading, we analyze variation in trading behavior within and between private and publicly visible portfolios. The disposition effect diminishes by about 35% when trades and holdings become public. We find the level of transparency and the way financial information is illustrated can influence trading decisions. Our results suggests that requiring greater transparency from portfolio managers can reduce trading bias.

Source: European Financial Management

DOI: 10.1111/eufm.12329

Authors: Jo Danbolt, Arman Eshraghi, Marcel Lukas

Institutions: University of Edinburgh, Cardiff University, University of St Andrews

Language: English

Topic: Financial Markets and Investment Strategies

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: green

OpenAlex ID: W3180675434

FWCI: 2.28

Cites: 78

Cited by: 20

Related to: 10