Mobile device use and the ranking effect on trading behavior: Evidence from natural experiments

Haibo Wu and Chongfeng Wu

Pacific-Basin Finance Journal, 2024, vol. 85, issue C

Abstract: This paper investigates how the trading behavior of investors using mobile devices differs from that of investors using PCs in the context of limited attention. We hypothesize that mobile device-based trading is associated with a stronger “ranking effect” that investors disproportionally trade top-ranked stocks. By exploiting the exogeneity of the return-based ranking of price limit events, we examine the ranking effect on retail investors' buying behavior and find supportive evidence that (1) based on the absolute returns of price limit events, top-ranked stocks are more heavily bought than the lower ranks by investors using mobile devices, while there is no significant ranking effect for investors using PCs; and (2) the ranking effect is enhanced with the increase of the number of contemporaneous price limit events.

Keywords: Mobile technology; Screen size; Ranking effect; Limited attention; Price limit events (search for similar items in EconPapers)
JEL-codes: G11 G14 O33 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:85:y:2024:i:c:s0927538x24000684

DOI: 10.1016/j.pacfin.2024.102317

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