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Losing by learning? A study of social trading platform

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  • Jin, Xuejun
  • Zhu, Yu
  • Huang, Ying Sophie

Abstract

This paper is the first to use a unique dataset extracted from a popular social trading platform in China to investigate whether social learning on average encourages riskier trading and hurt stock portfolio returns. We observe an increasing trading frequency and a preference for high-volatility stocks for signal followers on average in the network over time. Furthermore, we find leading trades perform relatively better than lagging ones, indicating social learning in a social trading network is not positively associated with portfolio performance. Taken together, our empirical results are in support of Han et al. (2018).

Suggested Citation

  • Jin, Xuejun & Zhu, Yu & Huang, Ying Sophie, 2019. "Losing by learning? A study of social trading platform," Finance Research Letters, Elsevier, vol. 28(C), pages 171-179.
    • Handle: RePEc:eee:finlet:v:28:y:2019:i:c:p:171-179
    DOI: 10.1016/j.frl.2018.04.017
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    References listed on IDEAS

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    Cited by:

    1. Daphne W. Yiu & William P. Wan & Kelly Xing Chen & Xiaocong Tian, 2022. "Public sentiment is everything: Host-country public sentiment toward home country and acquisition ownership during institutional transition," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 53(6), pages 1202-1227, August.
    2. Erdős, Sándor & Papp, Tamás & Vörös, Zsófia, 2022. "The effects of community-based signals on investment decisions in copy trading," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 97(C).
    3. Schneider, Julian & Oehler, Andreas, 2021. "Competition for visibility: When do (FX) signal providers employ lotteries?," International Review of Financial Analysis, Elsevier, vol. 78(C).

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    More about this item

    Keywords

    Social trading; Portfolio management; Risk-taking behavior;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets

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