Retail Investor Trading Around Earnings Announcements
Prof. Rubin HAO
Assistant Professor in Accounting
FBA, UM
Date: 28 April 2025 (Monday)
Time: 13:00-14:00
Venue: FBA Lobby
Abstract
This study examines how retail investors trade around earnings announcements. Using proprietary individual investor account-level data from a Chinese brokerage house, we document abnormal retail trading volume around earnings announcements. More importantly, retail investors trade in a contrarian style, exhibiting net selling in the top-quintile (good news) subgroup of earnings news. This trading pattern cannot be explained by pre-announcement momentum. We find no evidence that the contrarian trading is related to investors’ educational background or wealth, which we use as proxies of investor sophistication. We find a specific subgroup of investors consistently engages in such contrarian trading pattern. The contrarian trading strategy might relate to behavioral explanations such as the disposition effect. Further analysis shows that retail investors’ trading around earnings announcements, on average, incurs losses.
Speaker
HAO Rubin currently serves as an assistant professor in Accounting at Faculty of Business Administration, University of Macau. His research interest includes capital market, corporate disclosure and governance.
All are welcome!
