Smartphone Trading Technology, Investor Behavior, and Mutual Fund Performance

Xiao Cen ()
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Xiao Cen: Mays Business School, Texas A&M University, College Station, Texas 77843

Management Science, 2024, vol. 70, issue 10, 6897-6916

Abstract: Using proprietary individual-level trading data around a natural experiment—the release of a smartphone trading app by a large investment advisor—this study investigates how smartphone trading technology affects retail investor behavior and mutual fund performance. App adoption by retail investors leads to an increase in investor attention and trading volume. App adopters’ flows become more sensitive to short-term fund returns and market sentiment, resulting in higher aggregate flow volume among adopters. The funds more exposed to the shock experience a greater decline in abnormal returns, likely attributable to higher fund flow volume and liquidity costs. As a result, both adopters and nonadopters experience a decline in their mutual fund investment returns.

Keywords: smartphone technology; investment; mutual fund; fintech; investor behavior (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:70:y:2024:i:10:p:6897-6916

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