All that Glitters: The Effect of Attention and News on the Buying Behavior of Individual and Institutional Investors
Posted: 26 Jun 2008
There are 2 versions of this paper
All that Glitters: The Effect of Attention and News on the Buying Behavior of Individual and Institutional Investors
Date Written: April 2008
Abstract
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 do not face the same search problem when selling because they tend to sell only stocks they already own. We hypothesize that many investors consider purchasing only stocks that have first caught their attention. Thus, preferences determine choices after attention has determined the choice set.
Suggested Citation: Suggested Citation
Brad M. Barber (Contact Author)
University of California, Davis ( email )
Graduate School of Management
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Terrance Odean
University of California, Berkeley - Haas School of Business ( email )
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Berkeley, CA 94720
United States
510-642-6767 (Phone)
510-666-2561 (Fax)
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