Investor Overconfidence and Trading Volume

@article{Statman2003InvestorOA,
  title={Investor Overconfidence and Trading Volume},
  author={M. Statman and Steven Thorley and Keith Vorkink},
  journal={Review of Financial Studies},
  year={2003},
  volume={19},
  pages={1531-1565}
}
The proposition that investors are overconfident about their valuation and trading skills can explain high observed trading volume. With biased self-attribution, the level of investor overconfidence and thus trading volume varies with past returns. We test the trading volume predictions of formal overconfidence models and find that share turnover is positively related to lagged returns for many months. The relationship holds for both market-wide and individual security turnover, which we… Expand

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