Who is the more overconfident trader? Individual vs. institutional investors

Impact of the Self-Attribution Bias on the Trading Activity: The Case of the Tunisian Stock Market

“…Our findings are consistent with those of Chuang and Lee (2006) in the U.S market, Glaser andWeber (2009) in Germany andChuang andSusmel (2011) in Taiwan. Furthermore, in their sample of 46 markets, Griffin et al (2007) considered 20 emerging markets which do not include the Tunisian market.…”

“…They found that past market returns and the past portfolio returns are positively and significantly related to the trading volume. Chuang and Susmel (2011) reported similar results on the Taiwanese stock market for the periods 1996-2007 and 2001-2006, respectively. Further evidence was provided by Griffin, Nardari and Stulz (2007) for 31 out of 46 financial markets during the period 1993-2003 with a prevalent effect in developing markets than in developed ones.…”

“…Chuang andLee (2006, p. 2490) noticed that "Trading motivated from hedging and liquidity purposes seems to explain only a small fraction of the observed trading activity and fails to support a substantial amount of trade in the real world". In this regard, several behavioral models were developed to explain the excessive trading volume in stock markets based on overconfidence and self-attribution biases (Daniel, Hirshleifer andSubrahmanyam, 1998, Gervais andOdean, 2001;and Scheinkman and Xiong, 2003).…”

Trading Puzzle, Puzzling Trade

“…where TradedValue is calculated as 0.5 times the average of weekly total trades in terms of market value for the each investor j, and Barber and Odean (2000), Chuang and Susmel (2011) Note that the "average return" is market adjusted by subtracting the market index from raw returns as in (3). Next, to analyze return differences between investors with respect to turnover ratios, investors are sorted into quintiles based on weekly turnover.…”

“…They generally hold on to their purchases for a very short period of time compared to the other institutional investors (Kaniel, Saar, Titman (2008)). Chuang and Susmel (2011) compared institutional to individual inventors on their return performances and found that individual investor trades even more aggressively in bearish markets whereas institutional investors trade relatively conservatively. This paper also contributes to the literature with the weekly performance analysis of individual investors.…”