New publication: “About the fear of reputational loss: Social trading and the disposition effect”

The paper “About the fear of reputational loss: Social trading and the disposition effect” has been accepted for publication in the Journal of Banking and Finance (VHB-JOURQUAL3: A). The paper studies the relationship between giving financial advice and the disposition effect in an online trading environment. A novel form of online brokerage, so-called social trading platforms, combine features of online brokerage with features of social media. These platforms allow investors to interact with each other, observe the trading activities of other investors, and—manually or automatically—copy the investment strategies of their peers. In the paper, we study the impact of becoming a peer advisor in the context of social trading. Our results indicate that these investors, i.e. the investors who become leaders, are especially concerned with their social image and are more susceptible to the disposition effect. The paper is part of a larger project studying retail investors’ trading behavior.