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How much do investors trade because of name/ticker confusion?

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  • Balashov, Vadim S.
  • Nikiforov, Andrei

Abstract

We conduct a search for pairs of companies with similar names/ticker symbols. Between 12% and 25% of such pairs exhibit co-movements in trading turnover, which we attribute to investor confusion. We estimate that trades made by mistake contributed to 5% of the trading turnover. The three-hour CARs for the company chosen by mistake around the time intervals with extreme returns for the paired company are 0.5%. The confusion is highest for large companies and around time intervals with high turnover. We show that when the cause of confusion disappears, the co-movement in turnover also disappears.

Suggested Citation

  • Balashov, Vadim S. & Nikiforov, Andrei, 2019. "How much do investors trade because of name/ticker confusion?," Journal of Financial Markets, Elsevier, vol. 46(C).
    • Handle: RePEc:eee:finmar:v:46:y:2019:i:c:s1386418118303094
    DOI: 10.1016/j.finmar.2019.06.002
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    Cited by:

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    2. Ryuichiro Izumi & Antonis Kotidis & Paul E. Soto, 2024. "Trademarks in Banking," Wesleyan Economics Working Papers 2024-004, Wesleyan University, Department of Economics.

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    More about this item

    Keywords

    Ticker symbol; Investor confusion; Similarly identified securities; Market inefficiency; Investor irrationality;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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