Abstract
The diminishing importance of retail investors and the institutionalization of markets are arguably a result of the general perception that individuals are not well informed and, hence, are better off using professional services (Davis, 2009). However, this paper provides evidence supporting the opposite. Using a global sample, we examine whether retail trading is informative around the world. Overall, retail investors are documented to enhance price efficiency by trading in the same direction as permanent price changes, contributing 24.8 % to price discovery, and accelerating the information from both scheduled and unscheduled news to be impounded into prices.
| Original language | English |
|---|---|
| Pages (from-to) | 475-492 |
| Number of pages | 18 |
| Journal | German Economic Review |
| Volume | 21 |
| Issue number | 4 |
| Early online date | 1 Jul 2020 |
| DOIs | |
| Publication status | Published - 16 Dec 2020 |
| Externally published | Yes |
Bibliographical note
Publisher Copyright:© 2020 Walter de Gruyter GmbH, Berlin/Boston 2020.
Funding
I acknowledge the Start-up Research Grant ( SRG2018-00115-FBA) from the University of Macau
Keywords
- Global Markets
- Price Discovery
- Retail Trading
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