Retail Trading Response to Forced CEO Turnover: Evidence from Robinhood




Cozby, Merritt

Journal Title

Journal ISSN

Volume Title



Robinhood has revolutionized investing by allowing anyone to begin trading at no cost and the click of a button. However, the app’s simplicity has caused debate about making trading too easy for new investors, specifically facilitating disadvantageous trading behavior. Using daily data of retail investors’ stock holdings on Robinhood, I examine if retail traders exhibit adverse trading behavior such as overtrading or attention-induced trading in response to CEO turnover. I found that retail traders on the mobile platform do not change their holdings in a uniform way in response to forced CEO turnover. I performed market and Robinhood user holdings analyses on volume and turnover in response to a CEO dismissal. I found considerable variation in the results of the Robinhood trading behavior providing insignificant evidence for meaningful retail trading responses to this specific announcement. I expected retail traders on Robinhood to make significant portfolio adjustments in response to CEO dismissals as these announcements spark noise and attention in the market. However, the responses varied across the data sample, providing no conclusive evidence that this information, in the aggregate, affects retail traders’ decision-making. This paper was proposed to understand better what informs retail traders’ investing decisions and how mobile investing platforms can facilitate more informed decision-making for their user base.



LCSH Subject Headings