Investment transparency and the disposition effect

Johan Danbolt, Arman Eshraghi, Marcel Lukas*

*Corresponding author for this work

Research output: Contribution to journal › Article › peer-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 / Materials (for Non-textual outputs)

  • disposition effect
  • transparency
  • social trading
  • fund management

Access to Document

  • DanboltEtal2021EFMInvestmentTransparencyAndTheDispositionEffect

    This is the peer reviewed version of the following article: Danbolt, J., Eshraghi, A., & Lukas, M. (2021). Investment transparency and the disposition effect. European Financial Management, 1– 32. https://doi.org/10.1111/eufm.12329, which has been published in final form at https://onlinelibrary.wiley.com/doi/10.1111/eufm.12329. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving.

    Accepted author manuscript, 801 KB

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