The authors would like to thank an anonymous referee and the editor, John Doukas, for helpful comments on earlier versions of this paper.
Overconfidence and Investor Size
Article first published online: 29 OCT 2007
European Financial Management
Volume 14, Issue 1, pages 82–98, January 2008
How to Cite
Ekholm, A. and Pasternack, D. (2008), Overconfidence and Investor Size. European Financial Management, 14: 82–98. doi: 10.1111/j.1468-036X.2007.00405.x
- Issue published online: 29 OCT 2007
- Article first published online: 29 OCT 2007
- investor size;
- trading behaviour;
Recent research documents that institutional or large investors act as antagonists to other investors by showing opposite trading behaviour following the disclosure of new information. Using an extremely comprehensive official transactions data set from Finland, we set out to explore the interrelation between investor size and behaviour. More specifically, we test whether investor size is positively (negatively) correlated with investor reaction following positive (negative) news. We document robust evidence of that investor size affects investor behaviour under new information, as larger investors on average react more positively (negatively) to good (bad) news than smaller investors. We furthermore find that the performance of smaller, or more overconfident, investors is in general hurt by their behaviour.