Institutional trading,investor sentiment,and lottery-like stock preferences |
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Authors: | Dallin M Alldredge |
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Institution: | College of Business, Florida International University, Miami, Florida |
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Abstract: | This paper explores the time-varying institutional investor preference for lottery-like stocks. On average, institutional investor holdings reflect an aversion to lottery-like stocks. However, I find that an institutions’ aversion to lottery-like stocks is reduced when investor sentiment is low. Moreover, I find that during low sentiment periods, institutional investors have abnormally high trading profits in more positively skewed stocks. These results suggest that institutions reduce their aversion toward lottery-like stocks during low sentiment periods to profitably trade in lottery-like stocks. |
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Keywords: | institutional investors investor sentiment lotteries skewness |
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