Are All Individual Investors Created Equal? Evidence from Individual Investor Trading around Securities Litigation Events

Paul A. Griffin, Ning Zhu
2005 Social Science Research Network  
This study examines the trading behavior of individual (retail) investors around securities litigation disclosure events. We hypothesize and find that less informed investors (low-income investors and investors in non-professional occupations) purchase earlier in the class period relative to more informed investors who tend to sell later in the class period. We also find that more informed investors achieve higher returns, or at least incur fewer losses, than less informed investors during the
more » ... lass period. Less informed investors are, therefore, more likely to suffer greater class action damages than more informed investors from their presumed reliance on allegedly false information. JEL Class$cations: G14, G15, K22, K41
doi:10.2139/ssrn.740485 fatcat:gdqjytl635f75mpwvwfkoy5f6u