The Impact of Financial Advice on Trade Performance and Behavioral Biases

Item Type Journal paper
Abstract

We use a dataset from a large retail bank to examine the impact of financial advice on investors’ stock trading performance and behavioral biases. Our data allow us to classify each individual trade as either advised or independent and to compare them in a trade-bytrade within-person analysis. Thus, our study is not plagued by the endogeneity problems typically faced by studies on financial advice. We document that advisors hurt trading performance. However, they help to reduce some of the behavioral biases retail Investors are subject to, but this does not overcompensate the negative performance effects of the bad stock recommendations.

Authors Hoechle, Daniel; Ruenzi, Stefan; Schaub, Nic & Schmid, Markus
Journal or Publication Title Review of Finance
Language English
Keywords financial advice, individual investors, trade performance, behavioral biases
Subjects economics
finance
Institute/School ?? Referenten ??
s/bf - Swiss Institute of Banking and Finance
?? SoF Pr Inst ??
HSG Classification contribution to scientific community
Refereed No
Date March 2017
Publisher Oxford University Press
Volume 21
Number 2
Page Range 871-910
Publisher DOI 10.1093/rof/rfw032
Contact Email Address nic.schaub@unisg.ch
Depositing User Beatrix Kobelt-Glock
Date Deposited 02 Jun 2016 10:58
Last Modified 12 Feb 2018 05:20
URI: https://www.alexandria.unisg.ch/publications/248453

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Citation

Hoechle, Daniel; Ruenzi, Stefan; Schaub, Nic & Schmid, Markus (2017) The Impact of Financial Advice on Trade Performance and Behavioral Biases. Review of Finance, 21 (2). 871-910.

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https://www.alexandria.unisg.ch/id/eprint/248453
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