Publications
Type of Publication: Article in Journal
Alphabetic Bias, Investor Recognition, and Trading Behavior
- Author(s):
- Jacobs, Heiko; Hillert, Alexander
- Title of Journal:
- Review of Finance
- Volume (Publication Date):
- 2016 (2016)
- Number of Issue:
- 20
- pages:
- 693-723
- Keywords:
- trading behavior, behavioral finance, name effects, limited attention, ordering effects
- Digital Object Identifier (DOI):
- doi:10.1093/rof/rfv060
- Link to complete version:
- https://academic.oup.com/rof/article/20/2/693/2461444
Abstract
Abstract
Extensive research has revealed that alphabetical name ordering tends to provide an advantage to those positioned in the beginning of an alphabetical listing. This paper is the first to explore the implications of this alphabetic bias in financial markets. We find that U.S. stocks that appear near the top of an alphabetical listing have about 5% to 15% higher trading activity and liquidity than stocks that appear towards the bottom. The magnitude of these results is negatively related to firm visibility and investor sophistication. International evidence and fund flows further indicate that ordering effects can affect trading activity and liquidity.