Investor Attention and Portfolio Performance: What Information Does It Pay to Pay Attention To?

62 Pages Posted: 12 Aug 2019 Last revised: 10 Feb 2021

See all articles by Denis Davydov

Denis Davydov

Hanken School of Economics

Ian Khrashchevskyi

Stockholm Business School, Stockholm University

Jarkko Peltomäki

Stockholm University - Stockholm Business School

Date Written: December 20, 2019

Abstract

We explore a unique dataset on individual investors’ online trading accounts to examine the determinants of their attention and its relation to portfolio performance. In particular, we investigate what individual characteristics affect investor attention and what type of information drives investment performance. We find distinct differences in investors’ attention and provide evidence that paying attention has a differential impact on performance depending on the type of information. Portfolio monitoring and attention to financial education are positively related to performance, while attention to analytical information is detrimental to performance. Attention to technical analysis is negatively related to the performance of actively trading investors but improves the performance of less frequent traders. Overall, our results provide additional evidence to the suggestion that attention to financial education is the key to investment success.

Keywords: investor attention, financial education, portfolio performance, information type

JEL Classification: G11, G29, G40

Suggested Citation

Davydov, Denis and Khrashchevskyi, Ian and Peltomäki, Jarkko, Investor Attention and Portfolio Performance: What Information Does It Pay to Pay Attention To? (December 20, 2019). Available at SSRN: https://ssrn.com/abstract=3436074 or http://dx.doi.org/10.2139/ssrn.3436074

Denis Davydov

Hanken School of Economics ( email )

PB 287
Helsinki, Vaasa 65101
Finland

Ian Khrashchevskyi

Stockholm Business School, Stockholm University ( email )

Sweden

Jarkko Peltomäki (Contact Author)

Stockholm University - Stockholm Business School ( email )

Stockholm
Sweden

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