Does Non-Informative Text Affect Investor Behavior?

Forthcoming, Financial Management

47 Pages Posted: 27 Nov 2012 Last revised: 27 Oct 2018

See all articles by Alyssa G. Anderson

Alyssa G. Anderson

Board of Governors of the Federal Reserve System (FRB)

Yelena Larkin

York University - Schulich School of Business

Date Written: April 10, 2018

Abstract

This paper demonstrates that easily processed texts affect investor trading behavior even in the absence of any informational content. We examine the trading symbols of US firms and find that stocks with clever tickers (those that are actual words in the English language) are more liquid, as measured by higher turnover and trading volume, as well as lower spreads. Furthermore, clever ticker stocks are traded more by uninformed investors, and have larger market reactions on earnings announcement days. These results suggest that ticker fluency facilitates trading by improving the firm’s visibility among retail investors through attention-grabbing and memorization.

Keywords: ticker symbols, behavioral biases, fluency, liquidity

JEL Classification: G11, G14

Suggested Citation

Anderson, Alyssa G. and Larkin, Yelena, Does Non-Informative Text Affect Investor Behavior? (April 10, 2018). Forthcoming, Financial Management, Available at SSRN: https://ssrn.com/abstract=2181195 or http://dx.doi.org/10.2139/ssrn.2181195

Alyssa G. Anderson

Board of Governors of the Federal Reserve System (FRB) ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Yelena Larkin (Contact Author)

York University - Schulich School of Business ( email )

4700 Keele Street
Toronto, Ontario M3J 1P3
Canada

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