The advent of smartphone trading apps is reshaping retail investor behavior and is leading to significant shifts in market dynamics. This episode of Created at Mays goes through the key insights of research done by Dr. Xiao Cen, assistant professor of finance at Mays Business School. She writes about her experiment and research in the new article, “Smartphone Trading Technology, Investor Behavior, and Financial Fragility” published in the Journal of Management Science.

Read Dr. Xiao Cen’s full article here: 

The Created at Mays Podcast is a production of the Mays Business School and Texas A&M University, and is produced by University FM.

KEY TAKEAWAYS ON SMARTPHONE TRADING TECHNOLOGY

• The surge of smartphone trading apps has led to an increase in investor engagement and trading volume.
• The study found that app users react more intensely to short term market trends and fund returns.
• This technology has led to a negative impact on mutual fund returns, as funds with a higher concentration of smartphone traders experienced reduced abnormal returns
• The behavior of app users doesn't just affect their own portfolios, it creates negative externalities for other investors in the same funds who might have faced lower returns due to the escalated trading activity of app adopters.
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SHOW LINKS:

• Faculty profile for Dr. Xiao Cen