Journal of Financial and Quantitative Analysis Vol. 61 No. 4 2026
Why Do Investors Hold Overpriced Shares?
open access
Abstract
Stocks that are expensive to borrow underperform significantly and for long periods of time. Every share must be held by an investor who does not lend it out and, hence, loses money. I find no evidence that investors hold these stocks in anticipation of lending them in the future. Instead, investors appear to hold these stocks for short-term trading. When turnover is high, high-fee stocks are overpriced and underperform. When turnover is low, high-fee stock prices are low, and they earn positive returns. More Robinhood investors hold shares when turnover is high than when it is low.
- DOI
- 10.1017/s0022109025102196
- Volume
- 61
- Issue
- 4
- Pages
- 1979-2006
- Language
- en
- Sources
- openalex crossref