Individual Investors and Broker Types

Kingsley Y. L. Fong; David R. Gallagher; Adrian D. Lee

doi:10.1017/s0022109014000349

Journal of Financial and Quantitative Analysis Vol. 49 No. 2 2014

Individual Investors and Broker Types

Kingsley Y. L. Fong^{1,2,3,4,5,6,7,8}; David R. Gallagher^{1,2,3,4,5,6,7,8}; Adrian D. Lee^{1,2,3,4,5,6,7,8}

¹ University of Technology Sydney · ² The University of Western Australia · ³ Australian Institute of Business · ⁴ Financial Services Institute of Australasia · ⁵ UNSW Sydney · ⁶ Department of Finance · ⁷ Institute of Finance and Banking · ⁸ Macquarie University

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Abstract

We study the informativeness of trades via discount and full-service retail brokers. We find that trades via full-service retail brokers are statistically and economically more informative than are trades via discount retail brokers. This finding holds in every year over the 12-year sample period and in various subsamples. We also find that past returns, volatility, and news announcements positively relate to the net volume of discount retail brokers, but these variables are unrelated to the net volume of full-service retail brokers. Our results suggest that broker type selection bias is an important consideration in studying individual investors’ trades.

DOI: 10.1017/s0022109014000349
Volume: 49
Issue: 2
Pages: 431-451
Language: en
Sources: bibtex:phds-export.bib openalex crossref

Individual Investors and Broker Types

Abstract

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