 Retail investors’ escaping from the bottom and clustering at the top of the trend in ChinaXiang Wu and Bing Zhang International Review of Economics & Finance, 2024, vol. 93, issue PB, 875-904 Abstract: This study investigates the bottom and top of the trend few researchers have focused on. Combining this with the behavior of retail investors in the unique Chinese stock market, we find that retail investors easily escape from the bottom of the trend, but cluster at the top. This finding holds after a series of robustness checks containing the other measurements of the bottom and top of the trend, the measurement of retail investors’ money flow, the trend selection of major shareholders, and the longer forecasting windows. The reasons for the retail investors’ behavior is that retail investors are stimulated by sentiment and captured by attention to buy at the top of the trend. Moreover, we find losing patience of retail investors impels the escaping from the bottom of the trend. Further analyses illustrate listed companies engaging in earnings management exacerbate retail investors’ clustering at the top and escaping from the bottom, but this issue can be mitigated through improvements in corporate governance and proactive market value management. Keywords: Bottom and top; Trend preference; Investor sentiment; Retail investors’ patience (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:93:y:2024:i:pb:p:875-904 DOI: 10.1016/j.iref.2024.04.032 Access Statistics for this article International Review of Economics & Finance is currently edited by H. Beladi and C. Chen More articles in International Review of Economics & Finance from Elsevier |
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