Release Time:2019-03-10  Hits:

Indexed by: Journal Article

Date of Publication: 2014-11-01

Journal: EMERGING MARKETS FINANCE AND TRADE

Included Journals: SSCI

Volume: 50

Page Number: 158-183

ISSN: 1540-496X

Key Words: abnormal volume; account information; attention-grabbing stocks; extreme returns; heterogeneous trading behavior

Abstract: Using a unique and comprehensive data set of China's Shenzhen Stock Exchange, we test whether all investors adopt attention-grabbing stocks. Only the less-wealthy individuals, the Small Group, are found to have the tendency to pursue attention-grabbing stocks, such as abnormal-volume stocks, extreme-return stocks, and initial public offering stocks. By contrast, wealthy individuals, such as the Middle and Large Groups, are the sellers of attention-grabbing stocks and prefer non-attention-grabbing stocks, thereby exhibiting a behavior resembling that of institutional investors. The wealth levels of individual investors may account for such heterogeneous trading behavior. Heterogeneous trading behavior may address one reason why only the less-wealthy individuals do poorly in China's stock market. Accordingly, we suggest that the Small Group manage the stock selection problem through consultancy with investment institutions.