Abstract
The disposition effect is lower in a trading environment with salient information on current holdings. Using proprietary data from a European fintech platform for social trading, we analyze variation in trading behavior within and between private and publicly-visible portfolios. The disposition effect diminishes by about 35% when trades and holdings become public. We find the level of transparency and the way financial information is illustrated can influence trading decisions. Our results suggests that requiring greater transparency from portfolio managers can reduce trading bias.
Original language | English |
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Pages (from-to) | 834-865 |
Number of pages | 32 |
Journal | European Financial Management |
Volume | 28 |
Issue number | 3 |
Early online date | 29 Jul 2021 |
DOIs | |
Publication status | Published - 1 Jun 2022 |
Keywords
- Disposition effect
- Transparency
- Social trading
- Fund management