Retail Investor Information Demand - Speculating and Investing in Structured Products

European Journal of Finance (Forthcoming)

38 Pages Posted: 27 Feb 2013 Last revised: 1 Mar 2015

See all articles by Sebastian Schroff

Sebastian Schroff

University of Hohenheim

Stephan Meyer

Karlsruhe Institute of Technology

Hans-Peter Burghof

University of Hohenheim

Date Written: February 10, 2015

Abstract

We study the impact of retail investor information demand on trading in bank-issued investment and leverage structured products, which are specifically designed for retail investors. Stock-specific information demand positively predicts speculative trading activity. Further, we find a positive relationship between market-wide information demand and order aggressiveness and order uncertainty for speculating and investing activity. Whereas information supply is associated with speculative long positions, information demand does not induce investors to be predominantly long or short. Finally, we do not find retail investor information demand to contribute to an upward price pressure on security prices. In contrast, information supply exerts negative price pressure. Overall, retail investor trading in individual stocks is much more strongly influenced by market-wide information instead of firm-specific information demand. This implies a low informational efficiency of retail investor speculation and investing activity.

Keywords: Retail Investors, Structured Products, Google Insights, Behavioral Finance, Information Discovery

JEL Classification: G10, G14

Suggested Citation

Schroff, Sebastian and Meyer, Stephan and Burghof, Hans-Peter, Retail Investor Information Demand - Speculating and Investing in Structured Products (February 10, 2015). European Journal of Finance (Forthcoming), Available at SSRN: https://ssrn.com/abstract=2223983 or http://dx.doi.org/10.2139/ssrn.2223983

Sebastian Schroff (Contact Author)

University of Hohenheim ( email )

Germany

Stephan Meyer

Karlsruhe Institute of Technology ( email )

Kaiserstraße 12
Karlsruhe, Baden Württemberg 76131
Germany

Hans-Peter Burghof

University of Hohenheim ( email )

Schloss Hohenheim
510F
Stuttgart, 70599
Germany
+49 711 459 22900 (Phone)
+49 711 459 23448 (Fax)

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