Mobile Apps, Portfolio Diversification, and Portfolio Performance:
Evidence from a Quasi-Experiment in China
by
Sunil Mithas
World Class Scholar and Professor
Muma College of Business
University of South Florida
Friday, Apr 8
11:00 am – 12:30 pm
In-person: 1810 Liacouras Walk, Room 420
Abstract:
Mobile apps are among the most important and widely used innovations in the brokerage industry. Surprisingly, despite their increasing economic importance and theoretical significance, few studies have examined the effects of mobile app use on individual investors’ financial decisions and performance. This study seeks to understand how mobile apps influence investors’ trading behaviors through portfolio diversification and portfolio performance in a quasi-experimental setting. We leverage a proprietary longitudinal dataset from a leading securities company, and adopt the staggered difference-in-differences specification as our main identification strategy. The findings suggest that mobile app adoption by retail investors leads to a 3.5% increase in portfolio diversification without deteriorating investors’ portfolio performance. Our exploratory analyses of underlying mechanisms suggest that mobile app adoption is especially beneficial for those who have high time constraints (by reducing transaction friction) and is less useful for those who are likely to be overconfident or who have high trend-chasing tendency (by boosting investors’ biases). Further analyses of adopters’ post-adoption behaviors show that mobile app usage intensity had an Inverted-U relationship with portfolio diversification and performance. In other words, balanced use of both PC and mobile channels permits desirable outcomes in terms of portfolio diversification and portfolio performance. We discuss the implications for research and practice.
Bio:
Sunil Mithas is a World Class Scholar and Professor at the Muma College of Business at the University of South Florida. Mithas has taught at the Robert H. Smith School of Business at the University of Maryland, and has held visiting positions in Australia, Germany and Hong Kong. He earned his PhD from the Ross School of Business at the University of Michigan and an engineering degree from IIT, Roorkee. Identified as an MSI Young Scholar by the Marketing Science Institute, Mithas is among top information systems scholars in the world. He has consulted and conducted research with a range of organizations including A. T. Kearney, Ernst & Young, Johnson & Johnson, the Social Security Administration, and the Tata Group. He is the author of two books, and his research has won best-paper awards, and featured in practice-oriented publications such as MIT Sloan Management Review, Bloomberg, and CIO.com.
