Investment transparency and the disposition effect

Johan Danbolt, Arman Eshraghi, Marcel Lukas*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

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.
Original languageEnglish
JournalEuropean Financial Management
Early online date12 Jul 2021
DOIs
Publication statusE-pub ahead of print - 12 Jul 2021

Keywords

  • disposition effect
  • transparency
  • social trading
  • fund management

Fingerprint

Dive into the research topics of 'Investment transparency and the disposition effect'. Together they form a unique fingerprint.

Cite this