Attention triggers and investors’ risk-taking

Marc Arnold, Matthias Pelster and Marti G. Subrahmanyam

Journal of Financial Economics, 2022, vol. 143, issue 2, 846-875

Abstract: This paper investigates how individual attention triggers influence financial risk-taking based on a large sample of trading records from a brokerage service that sends standardized push messages on stocks to retail investors. By exploiting the data in a difference-in-differences (DID) setting, we find attention triggers increase investors’ risk-taking. Our DID coefficient implies attention trades carry, on average, a 19 percentage-point-higher leverage than non-attention trades. We provide a battery of cross-sectional analyses to identify the groups of investors and stocks for which this effect is stronger.

Keywords: Investor attention; Trading behavior; Risk-taking (search for similar items in EconPapers)
JEL-codes: G11 G40 G41 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:143:y:2022:i:2:p:846-875

DOI: 10.1016/j.jfineco.2021.05.031

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