Googlization and Retail Investors’ Trading Activity

40 Pages Posted: 10 May 2019 Last revised: 13 Nov 2019

See all articles by Christophe Desagre

Christophe Desagre

Catholic University of Louvain (UCL) - Louvain Finance (LFIN)

Catherine D'Hondt

UCLouvain, Louvain School of Management - Louvain Finance

Date Written: November 7, 2019

Abstract

Building on Barber and Odean (2008), a growing body of papers document a positive relationship between Google Search Volume Index (SVI) and equity market returns. Such findings suggest that increased attention is combined with a buying pressure that subsequently results in positive returns. This relationship has been established at the market level. In this paper, we focus on a sample of retail investors and use SVI to test whether their aggregate (signed) trading activity is related to attention as well. We find that the relationship between SVI and our retail investors’ trading activity is positive, even when controlling for some socio-demographics or subjective investor characteristics. However, this relationship is not stronger for purchases than for sales, thereby providing no support for the buying pressure hypothesis. We also document a bi-directional causality between attention and trading activity, although the contemporaneous effects are economically stronger and predominate. Our results are robust to different measures of attention and trading activity.

Keywords: Investor Attention; Google SVI; Retail Investors

JEL Classification: D83; G11; G40

Suggested Citation

Desagre, Christophe and D'Hondt, Catherine, Googlization and Retail Investors’ Trading Activity (November 7, 2019). Available at SSRN: https://ssrn.com/abstract=3370658 or http://dx.doi.org/10.2139/ssrn.3370658

Christophe Desagre (Contact Author)

Catholic University of Louvain (UCL) - Louvain Finance (LFIN) ( email )

Chaussée de Binche, 151
Mons, 7000
Belgium

Catherine D'Hondt

UCLouvain, Louvain School of Management - Louvain Finance ( email )

151 Chaussée de Binche
Mons, 7000
Belgium

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