Attention‐Induced Trading and Returns: Evidence from Robinhood Users

• DOI: 10.1111/jofi.13183
• Publication Date: 2022-09-30T07:25:23Z
• Authors: BRAD M. BARBER; XING HUANG; TERRANCE ODEAN; CHRISTOPHER SCHWARZ
• Keywords: Stock (firearms); Trading strategy; Stock trading; Investor behavior

ABSTRACT We study the influence of financial innovation by fintech brokerages on individual investors’ trading and stock prices. Using data from Robinhood, we find that Robinhood investors engage in more attention‐induced than other retail investors. For example, outages disproportionately reduce high‐attention stocks. While this evidence is consistent with attracting relatively inexperienced investors, show it also driven part app's unique features. Consistent models trading, intense buying users forecasts negative returns. Average 20‐day abnormal returns are −4.7% for top stocks purchased each day.