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Appears in Collections:Accounting and Finance Journal Articles
Peer Review Status: Refereed
Title: Feedback trading: a review of theory and empirical evidence
Author(s): Economou, Fotini
Gavriilidis, Konstantinos
Gebka, Bartosz
Kallinterakis, Vasileios
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Keywords: feedback trading
behavioural finance
market efficiency
retail investors
institutional investors
foreign investors
Issue Date: 18-Feb-2022
Date Deposited: 7-Apr-2022
Citation: Economou F, Gavriilidis K, Gebka B & Kallinterakis V (2022) Feedback trading: a review of theory and empirical evidence. Review of Behavioural Finance.
Abstract: Purpose The purpose of this paper is to comprehensively review a large and heterogeneous body of academic literature on investors' feedback trading, one of the most popular trading patterns observed historically in financial markets. Specifically, the authors aim to synthesize the diverse theoretical approaches to feedback trading in order to provide a detailed discussion of its various determinants, and to systematically review the empirical literature across various asset classes to gauge whether their feedback trading entails discernible patterns and the determinants that motivate them. Design/methodology/approach Given the high degree of heterogeneity of both theoretical and empirical approaches, the authors adopt a semi-systematic type of approach to review the feedback trading literature, inspired by the RAMESES protocol for meta-narrative reviews. The final sample consists of 243 papers covering diverse asset classes, investor types and geographies. Findings The authors find feedback trading to be very widely observed over time and across markets internationally. Institutional investors engage in feedback trading in a herd-like manner, and most noticeably in small domestic stocks and emerging markets. Regulatory changes and financial crises affect the intensity of their feedback trades. Retail investors are mostly contrarian and underperform their institutional counterparts, while the latter's trades can be often motivated by market sentiment. Originality/value The authors provide a detailed overview of various possible theoretical determinants, both behavioural and non-behavioural, of feedback trading, as well as a comprehensive overview and synthesis of the empirical literature. The authors also propose a series of possible directions for future research.
DOI Link: 10.1108/rbf-12-2021-0268
Rights: Publisher policy allows this work to be made available in this repository. Published in Review of Behavioural Finance by Emerald. Economou F, Gavriilidis K, Gebka B & Kallinterakis V (2022) Feedback trading: a review of theory and empirical evidence. Review of Behavioural Finance, ahead-of-print (ahead-of-print). The original publication is available at: This author accepted manuscript is deposited under a Creative Commons Attribution Non-commercial 4.0 International (CC BY-NC) licence. This means that anyone may distribute, adapt, and build upon the work for non-commercial purposes, subject to full attribution. If you wish to use this manuscript for commercial purposes, please contact
Notes: Output Status: Forthcoming/Available Online
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