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  4. The Impact of Financial Advice on Trade Performance and Behavioral Biases
 
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The Impact of Financial Advice on Trade Performance and Behavioral Biases

Journal
Review of Finance
ISSN
1572-3097
ISSN-Digital
1875-824X
Type
journal article
Date Issued
2017-03
Author(s)
Hoechle, Daniel
Ruenzi, Stefan
Schaub, Nic  
Schmid, Markus  
DOI
10.1093/rof/rfw032
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.
Language
English
Keywords
financial advice
individual investors
trade performance
behavioral biases
HSG Classification
contribution to scientific community
Refereed
Yes
Publisher
Oxford University Press
Volume
21
Number
2
Start page
871
End page
910
URL
https://www.alexandria.unisg.ch/handle/20.500.14171/102585
Subject(s)

economics

finance

Division(s)

s/bf - Swiss Institut...

Contact Email Address
nic.schaub@unisg.ch
Eprints ID
248453
File(s)
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The Impact of Financial Advice on Trade Performance and Behavioral Biases.pdf

Size

758.93 KB

Format

Adobe PDF

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