Abstract

http://ssrn.com/abstract=1364014
 
 

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IQ, Trading Behavior, and Performance


Mark Grinblatt


University of California, Los Angeles (UCLA) - Finance Area; Yale University - International Center for Finance; National Bureau of Economic Research (NBER)

Matti Keloharju


Aalto University - School of Business; Research Institute of Industrial Economics (IFN); Centre for Economic Policy Research (CEPR)

Juhani T. Linnainmaa


University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)

June 9, 2011

Journal of Financial Economics, Forthcoming
CRSP Working Paper
AFA 2010 Atlanta Meetings Paper
EFA 2010 Frankfurt Meetings Paper
Chicago Booth Research Paper No. 09-33

Abstract:     
We analyze whether IQ influences trading behavior, performance, and transaction costs. The analysis combines equity return, trade, and limit order book data with two decades of scores from an intelligence test administered to nearly every Finnish male of draft age. Controlling for a variety of factors, we find that high-IQ investors are less subject to the disposition effect, more aggressive about tax-loss trading, and more likely to supply liquidity when stocks experience a one-month high. High-IQ investors also exhibit superior market timing, stock-picking skill, and trade execution.

Number of Pages in PDF File: 65

Keywords: Intelligence, household finance, trading performance

JEL Classification: G11, G14

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Date posted: March 20, 2009 ; Last revised: November 17, 2011

Suggested Citation

Grinblatt, Mark and Keloharju, Matti and Linnainmaa, Juhani T., IQ, Trading Behavior, and Performance (June 9, 2011). Journal of Financial Economics, Forthcoming; CRSP Working Paper; AFA 2010 Atlanta Meetings Paper; EFA 2010 Frankfurt Meetings Paper; Chicago Booth Research Paper No. 09-33. Available at SSRN: http://ssrn.com/abstract=1364014 or http://dx.doi.org/10.2139/ssrn.1364014

Contact Information

Mark Grinblatt
University of California, Los Angeles (UCLA) - Finance Area ( email )
Los Angeles, CA 90095-1481
United States
310-825-1098 (Phone)
310-206-5455 (Fax)
Yale University - International Center for Finance
Box 208200
New Haven, CT 06520-8200
United States
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Matti Keloharju (Contact Author)
Aalto University - School of Business ( email )
P.O. Box 21210
AALTO, FI-00076
Finland
+358 40 353 8043 (Phone)
Research Institute of Industrial Economics (IFN) ( email )
Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden
Centre for Economic Policy Research (CEPR) ( email )
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
Juhani T. Linnainmaa
University of Chicago - Booth School of Business ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
(773) 834-3176 (Phone)
(773) 753-1052 (Fax)
HOME PAGE: http://faculty.chicagobooth.edu/juhani.linnainmaa
National Bureau of Economic Research (NBER) ( email )
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
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References:  121
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