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Investment Performance of Individual Investors: Evidence from the Korean Stock Market

Author

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  • Jinwoo Park
  • Minhyuk Kim

Abstract

We use unique equity holdings data for each type of investor to investigate the relationship between individual investors' shareholdings and variables such as corporate characteristics and stock returns in the Korean stock market. We find that stocks with the highest individual holdings underperform stocks with the lowest individual holdings. This return difference is attributable to individual investors' uninformed stock-picking skills resulting from lack of attention given to or misinterpretation of readily accessible firm fundamentals. The results also indicate that characteristics of stocks preferred by individual investors are associated with small capitalization, low stock price, low profitability, and high turnover.

Suggested Citation

  • Jinwoo Park & Minhyuk Kim, 2014. "Investment Performance of Individual Investors: Evidence from the Korean Stock Market," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 50(1S), pages 194-211, January.
    • Handle: RePEc:mes:emfitr:v:50:y:2014:i:1s:p:194-211
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    Citations

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    Cited by:

    1. Brzeszczyński, Janusz & Bohl, Martin T. & Serwa, Dobromił, 2019. "Pension funds, large capital inflows and stock returns in a thin market," Journal of Pension Economics and Finance, Cambridge University Press, vol. 18(3), pages 347-387, July.
    2. Ahmet Sensoy, 2016. "Impact of sovereign rating changes on stock market co-movements: the case of Latin America," Applied Economics, Taylor & Francis Journals, vol. 48(28), pages 2600-2610, June.
    3. Stefano Alderighi, 2017. "A note on how to enhance liquidity in emerging markets by levering on trading participants," Economics Bulletin, AccessEcon, vol. 37(4), pages 2526-2532.

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