In this paper, we examine whether student investors are drawn to “attention-grabbing” stocks. We define “attention-grabbing” stocks as those that are issued by companies with either large numbers of Twitter followers, large general marketing budgets, or both. Our theory is that the more followers that a publicly traded company has on Twitter and/or the more money the company spends on marketing and advertising, the more likely a student would be to invest in its stock.
A field experiment was conducted in which undergraduate students constructed their own virtual stock portfolios. A treatment group was given a training seminar in stock market fundamentals in order to enhance their skillset for stock market analysis and stock selection. This was compared to a control group, who received no such training, with the intent to study the difference in stock selection. Students placed 7.45-percentage points more weight on “attention-grabbing” stocks than the weight of those stocks in the market capitalization-weighted S&P 500 benchmark index. Regression analysis reveals that students in our study were more likely to invest in stocks that fits our proxy measures for “attention-grabbing” after controlling for the market capitalization of the stocks. Additionally, stocks meeting our criteria for “attention-grabbing” carried greater weight by value in students’ portfolios than stocks that did not.