Do Investors Learn from Experience? Evidence from Frequent IPO Investors

Are retail traders compensated for providing liquidity?

“…These returns then reverse over the next several months. Although 1 Some notable contributions to the recent and growing literature on learning dynamics in finance are (Agarwal, Driscoll, Gabaix, and Laibson, 2008;Chiang, Hirshleifer, Qian, and Sherman, 2011;Choi, Laibson, Madrian, and Metrick, 2009;Greenwood and Nagel, 2009;Kaustia, Alho, and Puttonen, 2008;List, 2003;Mahani and Bernhardt, 2007;Nicolosi, Peng, and Zhu, 2009;Seru, Shumway, and Stoffman, 2009), and (Linnainmaa, 2011). Barber, Odean and Zhu (2009) interpret their results as evidence of noise trading, their findings are also consistent with individual investors providing liquidity to institutional investors.…”

Growing Up without Finance

“…A related literature studies how individual and professional experiences influence a wide array of behaviors, including investment and managerial decision making (e.g., Greenwood and Nagel 2009;Malmendier, Tate, and Yan 2011;Chiang et al 2011;Cole, Paulson, and Shastry 2014;Dittmar and Duchin 2016;Bernile, Bhagwat, and Rau 2017) and political preferences (Giuliano and Spilimbergo 2014;Fuchs-Schudeln and Schundeln 2015). Several papers consider the role of genetics on financial behaviors (Cronqvist andSiegel, 2015 andGrinblatt, Keloharju, andLinnainmaa, 2012).…”

Companies learning to innovate in recessions

“…Similarly, finance scholars have drawn on learning theories to understand how experience shapes investors' decisions and performance (see e.g. Kaustia and Knupfer, 2008;Seru et al, 2010;Chiang et al, 2011).…”