Attention Triggers and Investors' Risk-Taking
Journal of Financial Economics, DOI: 10.1016/j.jfineco.2021.05.031
69 Pages Posted: 20 Jul 2020 Last revised: 27 May 2021
Date Written: February 17, 2021
This paper investigates how individual attention triggers influence financial risk-taking based on a large sample of trading records from a brokerage service that sends standardized push messages on stocks to retail investors. By exploiting the data in a difference-in-differences (DID) setting, we find that attention triggers increase investors' risk-taking. Our DID coefficient implies that attention trades carry, on average, a 19-percentage point higher leverage than non-attention trades. We provide a battery of cross-sectional analyses to identify the groups of investors and stocks for which this effect is stronger.
Keywords: Investor Attention, Trading Behavior, Risk-Taking
JEL Classification: G10, G11, G12
Suggested Citation: Suggested Citation