Asymmetric investor behavior between buyside and sellside: Evidence from investor classes in the Sri Lankan stock market

Using unique trading data for investor classes from Sri Lanka, this study finds asymmetric investor behavior between buyside and sellside in large trades. Investors are positive feedback traders on the buyside and contrarians on the sellside. Domestic investors exhibit more feedback and contrarian b...

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Bibliographic Details
Published in:Journal of multinational financial management 2010-07, Vol.20 (2), p.93-113
Main Author: Samarakoon, Lalith P.
Format: Article
Language:English
Subjects:
Asymmetry
Contrarian trading
Domestic investors
Emerging markets
Equity
Equity flows
Equity flows Positive feedback trading Contrarian trading Foreign investors Domestic investors Emerging markets
Foreign investors
Individual behaviour
Institutional investors
Investors
Positive feedback trading
Sri Lanka
Stock exchange
Trade
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Summary:Using unique trading data for investor classes from Sri Lanka, this study finds asymmetric investor behavior between buyside and sellside in large trades. Investors are positive feedback traders on the buyside and contrarians on the sellside. Domestic investors exhibit more feedback and contrarian behavior than foreign investors, suggesting that foreign investors are more informed on the buyside and less informed on the sellside. Individuals are more feedback and contrarian traders than institutions. Foreign institutional investor sales do not precede, coincide with, or lead to significant returns. Trades do not lead to price momentum or reversals, but leave a permanent positive price effect.
ISSN:1042-444X
1873-1309
DOI:10.1016/j.mulfin.2010.07.007