ORIGINAL ARTICLE
Institutional trading, investor sentiment, and lottery-like stock preferences
Dallin M. Alldredge,
Corresponding Author
Dallin M. Alldredge
College of Business, Florida International University, Miami, Florida
Correspondence
Dallin M. Alldredge, College of Business, Florida International University, Miami, FL 33174.
Email: dalldred@fiu.edu
Search for more papers by this authorDallin M. Alldredge,
Corresponding Author
Dallin M. Alldredge
College of Business, Florida International University, Miami, Florida
Correspondence
Dallin M. Alldredge, College of Business, Florida International University, Miami, FL 33174.
Email: dalldred@fiu.edu
Search for more papers by this authorAbstract
This paper explores the time-varying institutional investor preference for lottery-like stocks. On average, institutional investor holdings reflect an aversion to lottery-like stocks. However, I find that an institutions’ aversion to lottery-like stocks is reduced when investor sentiment is low. Moreover, I find that during low sentiment periods, institutional investors have abnormally high trading profits in more positively skewed stocks. These results suggest that institutions reduce their aversion toward lottery-like stocks during low sentiment periods to profitably trade in lottery-like stocks.
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