Do retail investors bite off more than they can chew? A close look at their return objectives
(2021) , 50 pages
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- Abstract
- Using information self-reported by retail investors in a risk-return profiling survey, we investigate the determinants of individual return objectives as well as the capacity of investors to reach them. Controlling for a large set of covariates, we provide empirical evidence that return objectives are related to subjective individual characteristics (such as financial literacy and risk tolerance), some sociodemographics (age, education), as well as recent past trading intensity. Retail investors with higher return objectives perform better, compared to their counterparts who want to avoid any risk of capital loss. The capacity to reach the return objective however decreases as the level of return objectives increases.
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Citations
D’Hondt, C., De Winne, R., & Merli, M. (2021). Do retail investors bite off more than they can chew? A close look at their return objectives (LIDAM Discussion Paper LFIN 2021/03). https://hdl.handle.net/2078.5/114714