Publications

Type of Publication: Article in Journal

Alphabetic Bias, Investor Recognition, and Trading Behavior

Author(s):
Heiko Jacobs, Alexander Hillert
Title of Journal:
Review of Finance
Volume:
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://papers.ssrn.com/sol3/papers.cfm?abstract_id=2390015
Citation:
LABEL-FOR-eidrisexport

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.