All that Glitters: The Effect of Attention and News on the Buying Behavior of Individual and Institutional Investors
Brad M. Barber
University of California, Davis
University of California, Berkeley - Haas School of Business
EFA 2005 Moscow Meetings Paper
We test and confirm the hypothesis that individual investors are net buyers of attention-grabbing stocks, e.g., stocks in the news, stocks experiencing high abnormal trading volume, and stocks with extreme one day returns. Attention-driven buying results from the difficulty that investors have searching the thousands of stocks they can potentially buy. Individual investors don't face the same search problem when selling because they tend to sell only stocks they already own. We hypothesize that many investors only consider purchasing stocks that have first caught their attention. Thus, preferences determine choices after attention has determined the choice set.
Number of Pages in PDF File: 51
Keywords: attention, news, investor behavior, individual investors, behavioral finance, behavioral biases
JEL Classification: G11, G12, G14, G24working papers series
Date posted: June 20, 2005
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo3 in 0.527 seconds