The Effect of Personal Portfolio Reporting on Private Investors

Ralf Gerhardt*, Steffen Meyer

*Kontaktforfatter for dette arbejde

Publikation: Bidrag til tidsskriftTidsskriftartikelForskningpeer review

Resumé

Information search is costly for private households, especially in relation to their wealth. This paper investigates how retail customers react to free portfolio reporting—and thus reduced search costs—in a unique experimental setting. A large German direct bank sends portfolio reports to 10,000 customers while maintaining a control group of equal size and structure that receives no reports. Analyzing demographics as well as detailed portfolio and trade data, we find that gender, wealth, trade frequency, risk tolerance, and diversification drive the interest in portfolio information. Reading a portfolio report also triggers trading actions; thus, investors seem to appreciate the reduced information costs and act on the information. In addition to contributing to the financial literature on households’ information acquisition, this study derives valuable implications for financial institutions regarding communications and services for their customers.
OriginalsprogEngelsk
TidsskriftFinancial Markets and Portfolio Management
Vol/bind27
Udgave nummer3
Sider (fra-til)257-273
ISSN1934-4554
DOI
StatusUdgivet - 1. sep. 2013
Udgivet eksterntJa

Fingeraftryk

Private investors
Wealth
Household
Demographics
Risk diversification
Information costs
Risk tolerance
Communication
Information acquisition
Trigger
Retail
Financial institutions
Information search
Investors

Citer dette

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The Effect of Personal Portfolio Reporting on Private Investors. / Gerhardt, Ralf; Meyer, Steffen.

I: Financial Markets and Portfolio Management, Bind 27, Nr. 3, 01.09.2013, s. 257-273.

Publikation: Bidrag til tidsskriftTidsskriftartikelForskningpeer review

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AB - Information search is costly for private households, especially in relation to their wealth. This paper investigates how retail customers react to free portfolio reporting—and thus reduced search costs—in a unique experimental setting. A large German direct bank sends portfolio reports to 10,000 customers while maintaining a control group of equal size and structure that receives no reports. Analyzing demographics as well as detailed portfolio and trade data, we find that gender, wealth, trade frequency, risk tolerance, and diversification drive the interest in portfolio information. Reading a portfolio report also triggers trading actions; thus, investors seem to appreciate the reduced information costs and act on the information. In addition to contributing to the financial literature on households’ information acquisition, this study derives valuable implications for financial institutions regarding communications and services for their customers.

KW - Portfolio reporting

KW - Financial information

KW - Household portfolio

KW - Investment behavior

KW - Asset allocation

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