Business & Economics
This paper has met the requirements for Distinguished Honors.
In this paper, we look to find out whether or not student investors are drawn to “attention-grabbing” stocks. We define “attention-grabbing” stocks as those that are issued by companies with either large numbers of Twitter followers, large general marketing budgets, or both. Our theory is that the more followers that a publicly traded company has on Twitter and/or the more money the company spends on marketing and advertising, the more likely a student would be to invest in its stock.
A field experiment was conducted in which undergraduate students constructed their own virtual stock portfolios. A treatment group was given a training seminar in stock market fundamentals in order to enhance their skillset for stock market analysis and stock selection. This was compared to a control group, who received no such training, with the intent to study the difference in stock selection. Students placed 7.45-percentage points more weight on “attention-grabbing” stocks than the weight of those stocks in the market capitalization-weighted S&P 500 benchmark index. Regression analysis reveals that students in our study were more likely to invest in stocks that fits our proxy measures for “attention-grabbing” after controlling for the market capitalization of the stocks. Additionally, stocks meeting our criteria for “attention-grabbing” carried greater weight by value in students’ portfolios than stocks that did not.
Psaradakis, George, "Do Students Buy Attention-Grabbing Stocks? A Field Experiment" (2021). Business and Economics Honors Papers. 49.
Finance and Financial Management Commons, Marketing Commons, Portfolio and Security Analysis Commons, Social and Behavioral Sciences Commons
Funding for this research was provided by the Barnes Faculty Fellowship in Economics at Ursinus College.
Available as a supplemental file is a related poster presentation.