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Does communication increase investors’ trading frequency? Evidence from a Chinese social trading platform

Author

Listed:
  • Xuejun Jin

    (Zhejiang University)

  • Jiawei Yu

    (Zhejiang University)

Abstract

This study examines the impact of communication on investors’ trading frequency based on a unique dataset drawn from a Chinese social trading platform. We find robust evidence that real-account portfolio owners on the platform trade more frequently under the influence of the comments posted by their leaders (the owners of portfolios they have followed). Moreover, portfolio owners are more sensitive to the quantity than to the tone of leaders’ comments. Finally, both trading frequency and leaders’ comments negatively impact portfolio owners’ future performance. Our findings support the notion that social interaction promotes active investment strategies.

Suggested Citation

  • Xuejun Jin & Jiawei Yu, 2022. "Does communication increase investors’ trading frequency? Evidence from a Chinese social trading platform," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 8(1), pages 1-32, December.
    • Handle: RePEc:spr:fininn:v:8:y:2022:i:1:d:10.1186_s40854-022-00373-2
    DOI: 10.1186/s40854-022-00373-2
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    References listed on IDEAS

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    More about this item

    Keywords

    Communication; Social interaction; Social trading platform; Trading frequency;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets

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