Individual investors and broker types

Kingsley Y L Fong, David R. Gallagher, Adrian D. Lee

Research output: Contribution to journalArticlepeer-review

35 Citations (Scopus)


We study the informativeness of trades via discount and full-service retail brokers. We find that trades via full-service retail brokers are statistically and economically more informative than are trades via discount retail brokers. This finding holds in every year over the 12-year sample period and in various subsamples. We also find that past returns, volatility, and news announcements positively relate to the net volume of discount retail brokers, but these variables are unrelated to the net volume of full-service retail brokers. Our results suggest that broker type selection bias is an important consideration in studying individual investors' trades.

Original languageEnglish
Pages (from-to)431-451
Number of pages21
JournalJournal of Financial and Quantitative Analysis
Issue number2
Publication statusPublished - Apr 2014


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