ARE INDIVIDUAL INVESTORS INFORMED TRADERS? EVIDENCE FROM THEIR MIMICKING BEHAVIOR

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dc.contributor.advisorHann, Rebeccaen_US
dc.contributor.authorPolat, M. Fikreten_US
dc.contributor.departmentBusiness and Management: Accounting & Information Assuranceen_US
dc.contributor.publisherDigital Repository at the University of Marylanden_US
dc.contributor.publisherUniversity of Maryland (College Park, Md.)en_US
dc.date.accessioned2020-07-14T05:31:43Z
dc.date.available2020-07-14T05:31:43Z
dc.date.issued2020en_US
dc.description.abstractEvidence from a large stream of research suggests that individual investors are uninformed noise traders, who push equity prices away from fundamentals. Recent studies, however, find that individual investors are sophisticated—their trades contain information about future stock prices. In this study, I shed light on this debate by examining a potential channel through which individual investors become informed: trading disclosures of other market participants. Specifically, I examine whether individual investors exploit the proprietary trading strategies of institutional investors revealed in 13F filings. Using a large sample of retail trades, I find a significant positive association between the order imbalance of retail investors and the first buys of institutional investors around the 13F disclosure deadline, with the positive association concentrated among transient and growth-style institutions. The results suggest that not only do individual investors engage in mimicking trading, but their mimicking behavior is selective. I further find that retail investors’ order imbalance predicts future stock returns, with this predictive ability more pronounced in the week around the 13F disclosure deadline, which suggests that individual investors benefit from their selective mimicking trading. Lastly, I find that mimicking trading accelerates the price discovery of upcoming earnings news. Overall, this study enhances our understanding of how individual investors use public disclosures to become informed and contributes to the debate on whether individual investors are informed traders as well as work on the role of SEC disclosures in leveling the informational playing field.en_US
dc.identifierhttps://doi.org/10.13016/obti-w52h
dc.identifier.urihttp://hdl.handle.net/1903/26282
dc.language.isoenen_US
dc.subject.pqcontrolledAccountingen_US
dc.subject.pquncontrolledIndividual Investorsen_US
dc.subject.pquncontrolledInstitutional Investorsen_US
dc.subject.pquncontrolledInvestor Performanceen_US
dc.titleARE INDIVIDUAL INVESTORS INFORMED TRADERS? EVIDENCE FROM THEIR MIMICKING BEHAVIORen_US
dc.typeDissertationen_US

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