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Googlization and retail trading activity

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  • Desagre, Christophe
  • D’Hondt, Catherine

Abstract

A large body of literature documents a positive relationship between the Google Search Volume Index (SVI) and market returns or volumes. Such findings are consistent with a buying pressure due to increased attention. Unlike most of the studies that use market data, we use the trading accounts for a sample of retail investors. The advantage is twofold; we are able to disentangle purchases from sales, and our results are not biased by any institutional trading. We find that the relationship between the SVI and retail trading activity is positive but not stronger for purchases than for sales. We also demonstrate evidence of a bidirectional causality between attention and trading activity, though contemporaneous effects predominate. Our results are robust to controls based on sociodemographics or subjective investor characteristics, as well as various specifications of the SVI and different measures of trading activity.

Suggested Citation

  • Desagre, Christophe & D’Hondt, Catherine, 2021. "Googlization and retail trading activity," Journal of Behavioral and Experimental Finance, Elsevier, vol. 29(C).
    • Handle: RePEc:eee:beexfi:v:29:y:2021:i:c:s2214635020303828
    DOI: 10.1016/j.jbef.2020.100453
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    Cited by:

    1. Chen, Zhongdong & Craig, Karen Ann, 2023. "Active attention, retail investor base, and stock returns," Journal of Behavioral and Experimental Finance, Elsevier, vol. 39(C).
    2. de Castro, Jessica & Piccoli, Pedro, 2023. "Do online searches actually measure future retail investor trades?," International Review of Financial Analysis, Elsevier, vol. 86(C).
    3. D’Hondt, Catherine & Merli, Maxime & Roger, Tristan, 2022. "What drives retail portfolio exposure to ESG factors?," Finance Research Letters, Elsevier, vol. 46(PB).
    4. Catherine D’hondt & Maxime Merli & Tristan Roger, 2021. "What drives retail portfolio exposure to ESG factors?," Post-Print hal-03373287, HAL.

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    More about this item

    Keywords

    Investor attention; Google SVI; Retail investors;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G40 - Financial Economics - - Behavioral Finance - - - General

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