Retail investor attention and stock liquidity

Asset Liquidity and Stock Liquidity

We study the relation between the liquidity of the firm’s assets and the liquidity of financial claims on the assets, thereby linking corporate finance decisions to stock liquidity. Our model highlights an ambiguous relationship. While greater asset liquidity reduces uncertainty regarding valuation of assets-in-place, it increases future investments and the associated uncertainty. The model sho...

Glued to the TV: Distracted Retail Investors and Stock Market Liquidity

We investigate how distraction affects the trading behavior of retail investors, and ultimately market liquidity. Exploiting episodes of sensational news exogenous to the stock market, we first document that investors stop trading altogether when they are distracted. We report further that these effects are more pronounced for more overconfident–i.e., single-male and active–investors, who are t...

A Retail Investor?s Perspective on the Acceptance of Internet Stock Trading

In the digital economy of information and communication technology, several organizations from various industries are jumping onto the bandwagon of offering consumer-oriented electronic commerce applications. In Singapore, Internet Stock Trading has been at the forefront of this trend since 1998. However, to-date, the penetration rate of online trading remains low. As such, this paper attempts ...

Stock Liquidity and Default Risk*

Investor Competition over Information and Stock Returns

Drawing upon recent research on the governance effect of information competition among informed investors, we hypothesize a cross-sectional variation in future stock returns that is conditional on information competition. Measuring competition using the concentration of institutional ownership, we show one-quarter-ahead and one-year-ahead returns are increasing in the intensity of information c...