Investment transparency and the disposition effect

Danbolt, Jo, Eshraghi, Arman ORCID: https://orcid.org/0000-0002-7406-1725 and Lukas, Marcel 2022. Investment transparency and the disposition effect. European Financial Management 28 (3) , pp. 834-864. 10.1111/eufm.12329

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Abstract

The disposition effect is lower in a trading environment with salient information on current holdings. Using proprietary data from a European fintech platform for social trading, we analyze variation in trading behavior within and between private and publicly-visible portfolios. The disposition effect diminishes by about 35% when trades and holdings become public. We find the level of transparency and the way financial information is illustrated can influence trading decisions. Our results suggests that requiring greater transparency from portfolio managers can reduce trading bias.

Item Type:	Article
Date Type:	Publication
Status:	Published
Schools:	Schools > Business (Including Economics)
Subjects:	H Social Sciences > HG Finance
Publisher:	Wiley
ISSN:	1354-7798
Date of First Compliant Deposit:	12 July 2021
Date of Acceptance:	6 July 2021
Last Modified:	18 Nov 2024 10:45
URI:	https://orca.cardiff.ac.uk/id/eprint/142428

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