@article{92c05299e8e64a11a8ac9be47a815b11,
title = "Investor attention and the use of leverage",
abstract = "We investigate the effects of using different sources of investment leverage, that is, securities with embedded leverage and traditional margin accounts, on the portfolio performance of retail investors, recognizing that these effects may be conditional on investor attention. We find that investors who trade on margin underperform those who do not have margin accounts; we also find that investors trading securities with embedded leverage show even poorer performance than investors trading on margin. The negative effect of leverage usage, however, decreases with greater investor attention, measured by portfolio monitoring frequency. Results suggest that more attentive investors gain more from using investment leverage.",
keywords = "511 Economics, investor attention, investment leverage, margin trading, embedded leverage, portfolio performance",
author = "Denis Davydov and Jarkko Peltom{\"a}ki",
note = "Funding Information: We thank Michael Goldstein (the editor), two anonymous reviewers, Hasan Butt, Antonia Kirilova, Imane El Ouadghiri, Lin Peng, Muhammad Qayyum, Sebastian Schlie, Habeeb Yahua, seminar and conference participants at the Turku School of Economics, the 2021 World Finance Conference (virtual), the 2021 Southern Finance Association Annual Meeting (Captiva Island, FL), the 2022 Multinational Finance Society Annual Meeting (Gda{\'n}sk, Poland), the 2022 European Financial Management Association Annual Meeting (Rome, Italy), and the 2022 FMA European Conference (Lyon, France) for helpful comments and suggestions. Denis Davydov gratefully acknowledges the support from the Finnish Foundation for Share Promotion. Jarkko Peltom{\"a}ki is grateful to Jan Wallander and Tom Hedelius Foundation and Tore Browaldh Foundation for financial support. Any remaining errors are our own. Publisher Copyright: {\textcopyright} 2023 The Authors. The Financial Review published by Wiley Periodicals LLC on behalf of Eastern Finance Association.",
year = "2023",
month = feb,
day = "13",
doi = "10.1111/fire.12337",
language = "English",
volume = "58",
pages = "287--313",
journal = "The Financial Review",
issn = "0732-8516",
publisher = "Wiley-Blackwell",
number = "2",
}