Appetite for Information in Mandatory Profiling of Individual Investors

33 Pages Posted: 24 May 2017

See all articles by Anthony Bellofatto

Anthony Bellofatto

Catholic University of Louvain (UCL) - Louvain Finance (LFIN)

Marie-Hélène Broihanne

Strasbourg University, LaRGE Research Center, EM Strasbourg Business School

Date Written: May 24, 2017

Abstract

Financial knowledge and the investment in information of retail investors have been under scrutiny on the side of regulators and of academics. Actually, increasing financial literacy of individuals is one of the promising avenues in order to increase financial markets participation. In this paper, we use a natural field experiment offered by MiFID questionnaires to analyze the relationships between personal traits and trading behavior of retail investors who ask for supplementary information. Under a random matching procedure that controls for various survey answers, we analyze the trading characteristics of investors only differing from others on the side of their information appetite. We find that the investors who voluntary ask for more financial information, revealing de facto a particular personality trait, tend to behave more consistently with the Traditional Finance theory. Actually, they trade on a larger stock universe, execute less day-trades and are better diversified. They finally earn higher returns.

Keywords: information acquisition, personality trait, financial knowledge, MiFID questionnaires

JEL Classification: D83, D53, D14, G11

Suggested Citation

Bellofatto, Anthony and Broihanne, Marie-Hélène, Appetite for Information in Mandatory Profiling of Individual Investors (May 24, 2017). Available at SSRN: https://ssrn.com/abstract=2973136 or http://dx.doi.org/10.2139/ssrn.2973136

Anthony Bellofatto (Contact Author)

Catholic University of Louvain (UCL) - Louvain Finance (LFIN) ( email )

Chaussée de Binche, 151
Mons, 7000
Belgium

Marie-Hélène Broihanne

Strasbourg University, LaRGE Research Center, EM Strasbourg Business School ( email )

PEGE
61 avenue de la Forêt Noire
Strasbourg, 67000
France

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