How much do investors trade because of name/ticker confusion?

Vadim S. Balashov and Andrei Nikiforov

Journal of Financial Markets, 2019, vol. 46, issue C

Abstract: We conduct a search for pairs of companies with similar names/ticker symbols. Between 12% and 25% of such pairs exhibit co-movements in trading turnover, which we attribute to investor confusion. We estimate that trades made by mistake contributed to 5% of the trading turnover. The three-hour CARs for the company chosen by mistake around the time intervals with extreme returns for the paired company are 0.5%. The confusion is highest for large companies and around time intervals with high turnover. We show that when the cause of confusion disappears, the co-movement in turnover also disappears.

Keywords: Ticker symbol; Investor confusion; Similarly identified securities; Market inefficiency; Investor irrationality (search for similar items in EconPapers)
JEL-codes: G10 G14 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finmar:v:46:y:2019:i:c:s1386418118303094

DOI: 10.1016/j.finmar.2019.06.002

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