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- Title
Investor attention and the use of leverage.
- Authors
Davydov, Denis; Peltomäki, Jarkko
- Abstract
We investigate the effects of using different sources of investment leverage, that is, securities with embedded leverage and traditional margin accounts, on the portfolio performance of retail investors, recognizing that these effects may be conditional on investor attention. We find that investors who trade on margin underperform those who do not have margin accounts; we also find that investors trading securities with embedded leverage show even poorer performance than investors trading on margin. The negative effect of leverage usage, however, decreases with greater investor attention, measured by portfolio monitoring frequency. Results suggest that more attentive investors gain more from using investment leverage.
- Subjects
MARKET sentiment; INVESTORS; MARGINS (Security trading); INDIVIDUAL investors; PORTFOLIO performance; SECURITIES trading
- Publication
Financial Review, 2023, Vol 58, Issue 2, p287
- ISSN
0732-8516
- Publication type
Article
- DOI
10.1111/fire.12337