Brokers’ financial network and stock return

Hongwei Chuang

The North American Journal of Economics and Finance, 2016, vol. 36, issue C, 172-183

Abstract: Brokerage firms are usually not only known for trading stocks for their retail clients in return for commission fee but also known for being information distributors of their clients’ investment recommenders. However, only a few studies have examined investors’ trading behaviors within a brokerage firm. This study proposes a financial network model in modeling the information diffusion process of investors within brokerage firms and investigates the potential effect of interconnectedness among brokerage firms on stock returns. We find that the centrality of brokerage firms has strong explanatory power to stock returns even if we control for the Fama–French pricing factors and other characteristics of stock.

Keywords: Granger causality; Information diffusion; Brokerage firm; Financial network (search for similar items in EconPapers)
JEL-codes: C3 G2 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecofin:v:36:y:2016:i:c:p:172-183

DOI: 10.1016/j.najef.2016.01.001

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