Availability,recency, and sophistication in the repurchasing behavior of retail investors |
| |
Authors: | John R Nofsinger Abhishek Varma |
| |
Institution: | 1. Department of Finance and Management Science, College of Business, Washington State University, Pullman, WA 99164-4746, United States;2. Department of Finance, Insurance and Law, College of Business, Illinois State University, Campus Box 5480, Normal, IL 61790-5480, United States |
| |
Abstract: | When determining a stock to buy, Strahilevitz et al. (2011) demonstrate that individual investors often repurchase a stock previously traded for a profit as a learning process. When evaluating a decision, people use the most available information that comes to mind. We posit that the most recently sold stocks are the most salient. Our analysis reveals that the presence of another more recently sold stock decreases a household’s propensity to repurchase a different stock by 23%. This recency effect dominates the impact of prior profitability on the repurchasing decision. The repurchase activity of investors appears to be sub-optimal, partially due to commission costs and under-diversification of portfolios, which is magnified for households repurchasing at higher frequencies. More sophisticated investors demonstrate less of this behavior. |
| |
Keywords: | G02 G11 G14 |
本文献已被 ScienceDirect 等数据库收录! |
|