Investment transparency and the disposition effect

Jo Danbolt, Arman Eshraghi, Marcel Lukas*

*Corresponding author for this work

    Research output: Contribution to journalArticlepeer-review

    5 Citations (Scopus)
    7 Downloads (Pure)

    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 languageEnglish
    Pages (from-to)834-865
    Number of pages32
    JournalEuropean Financial Management
    Volume28
    Issue number3
    Early online date29 Jul 2021
    DOIs
    Publication statusPublished - 1 Jun 2022

    Keywords

    • Disposition effect
    • Transparency
    • Social trading
    • Fund management

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