How Much Do Investors Trade Because of Name/Ticker Confusion?

64 Pages Posted: 12 Jun 2019

See all articles by Vadim S. Balashov

Vadim S. Balashov

Rutgers School of Business-Camden

Andrei L. Nikiforov

Rutgers University

Date Written: May 25, 2019

Abstract

We conduct a search for pairs of companies with similar names/ticker symbols. Between 12% and 25% of such pairs exhibit co-movements in trading turnover, which we attribute to investor confusion. We estimate that trades made by mistake contributed to 5% of the trading turnover. The three-hour CARs for the company chosen by mistake around the time intervals with extreme returns for the paired company are 0.5%. The confusion is highest for large companies and around time intervals with high turnover. We show that when the cause of confusion disappears, the co-movement in turnover also disappears.

Keywords: Ticker Symbol, Investor Confusion, Similarly Identified Securities, Market Inefficiency, Investor Irrationality

JEL Classification: G10, G14

Suggested Citation

Balashov, Vadim S. and Nikiforov, Andrei L., How Much Do Investors Trade Because of Name/Ticker Confusion? (May 25, 2019). Journal of Financial Markets, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3394300

Vadim S. Balashov (Contact Author)

Rutgers School of Business-Camden ( email )

Camden, NJ 08102
United States
856-225-6706 (Phone)

Andrei L. Nikiforov

Rutgers University ( email )

Camden, NJ 08102
United States
856-225-6594 (Phone)

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