Deviations from norms and informed trading

Alok Kumar, Jeremy K. Page

Research output: Contribution to journalArticlepeer-review

18 Scopus citations


Investment managers are subject to personal and institutional norms that can constrain their investment choices. We conjecture that norm-constrained investors deviate from such norms only when they have compelling information, and we predict that deviating investments earn relatively high abnormal returns ex post. Consistent with our conjecture, we find that institutions averse to holding lottery-like stocks or sin stocks earn relatively high abnormal returns when they choose to hold such stocks. We find similar but weaker results for deviations from broader style categories. Overall, our evidence indicates that deviations from established institutional or social norms signal informed investing.

Original languageEnglish (US)
Pages (from-to)1005-1037
Number of pages33
JournalJournal of Financial and Quantitative Analysis
Issue number4
StatePublished - Aug 5 2014

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics


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