Investors’ Financial Attention Frequency and Trading Activity

56 Pages Posted: 7 Sep 2019 Last revised: 20 Jan 2020

See all articles by Wenwu Cai

Wenwu Cai

Chongqing University - School of Economy and Business Administration

Jing Lu

Chongqing University - School of Economics and Business Administration

Date Written: October 12, 2019

Abstract

Based on data on users’ daily adoption of securities service mobile applications, we measure investors’ financial attention frequency, which reflects how often they use such apps, to obtain information on their frequency of opening these apps and online duration. We find that financial attention frequency shows a clear ostrich effect, suggesting that investors acquire financial information less frequently following periods of low market returns and high market volatility. In addition, it significantly promotes trading activity in the market. Further, this driving force remains after a series of robustness tests controlling for other market factors such as investor attention and sentiment and after addressing endogeneity concerns. Finally, financial attention frequency also increases individuals’ net buying transactions.

Keywords: Securities Service Mobile Applications; Financial Attention Frequency; Ostrich Effect; Trading

JEL Classification: G12; G14

Suggested Citation

Cai, Wenwu and Lu, Jing, Investors’ Financial Attention Frequency and Trading Activity (October 12, 2019). Pacific-Basin Finance Journal, Vol. 58, No. 101239, 2019, Available at SSRN: https://ssrn.com/abstract=3447903 or http://dx.doi.org/10.2139/ssrn.3447903

Wenwu Cai (Contact Author)

Chongqing University - School of Economy and Business Administration ( email )

No.174 Shazhengjie
Shapingba
Chongqing, Chongqing 400044
China

Jing Lu

Chongqing University - School of Economics and Business Administration ( email )

Shapingba
Chongqing, 400030
China

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