Earticle

초록

영어

Retail investors have traditionally faced disadvantages compared to institutional investors in the stock market, primarily due to high transaction and information acquisition costs. However, advancements in financial technology are rapidly minimizing this gap. Online-trading systems accessible via personal computers (PC) and mobile devices have enabled retail investors to trade stocks with low transaction costs. Moreover, online information sites such as EDGAR and Seeking Alpha have made it easier for retail investors to retrieve information necessary for stock trading. As a result, individuals now have access to vast amounts of data and can manage their own stock portfolios through simple and easier manipulations (Barber and Odean 2002). APIs (Application Programming Interfaces) represent the most advanced and latest form of financial technology. APIs allow individuals to automatically collect vast amounts of data and receive it in a convenient tabular format to process. Consequently, APIs enable investors to implement and even automate agile trading strategies using the latest data. APIs are considered as an essential tool for retail investors to compete on a level playing field with institutional investors (Havakhor et al. 2021), but the cost of using APIs has made it challenging for retail investors to use them. However, the advent of free and lowcost APIs (e.g., EDGAR API and Yahoo! Financial API) has improved the competitive environment for retail investors. The impact of these financial technologies on retail investors has long been a subject of research, by offering both positive and negative implications for retail investors. For instance, Barber and Odean (2002) showed that investors have access to vast quantities of investment data in online trading, which can foster an illusion of knowledge that increases overconfidence and leads excessive trading, decreasing the performance of retail investors. Similarly, mobile applications for investing in the stock market offer simplified information that can result in negative outcomes for inexperienced retail investor (Barber et al. 2021). On the other hand, Farrell et al. (2022) showed that the informativeness of retail investors is enhanced as the cost of acquiring information about trading decreases, and Gao and Huang (2020) argued that greater information dissemination facilitated by up-to-date information technologies make individual investors more informative about future stock returns. However, research on the impact of APIs on the retail investor is still limited. In particular, there are a few studies on APIs providing financial information such as accounting information. APIs are distinct from other financial technologies in that they can analyze a vast amount of data in a shorter period of time and significantly reduce the cost of information acquisition. APIs may have a positive or negative impact on the performance of individual investors, similar to any technology. This study examines the impact of financial APIs on retail investors in stock market. We exploit the opening of the OpenDART service in Korea, which provides disclosure information such as accounting information of listing companies through open APIs. DART (Data Analysis, Retrieval and Transfer System) is an electronic disclosure system that allows companies to submit disclosures online, which become immediately available to investors and other users. The OpenDART service was officially launched in April 2020, providing disclosure information through an open-API to make it easier and quicker to use disclosure information. We use panel data consisting of quarterly disclosures, stock prices, and trading volumes around the opening of OpenDART from January 2018 to December 2022. We examine the response of retail investors before and after the launch of OpenDART, using the abnormal trading volume that occurs after the companies’ disclosure. To measure the abnormal trading volume, we analyze the trading volume before and after the regular disclosure date of every company in every quarter. We also examine the change in the predictive power of retail investors on stock prices by utilizing the net buy volume and CAR (cumulative abnormal return) of stocks after the disclosure. To measure the net buy volume and CAR, we perform an analysis of the cumulative amount of net buy and stock return after the disclosure for a certain period of time. Additionally, we investigate the impact of OpenDART on other investors including foreign and institutional investors and explore heterogeneous effects of OpenDART based on the market capitalization of stocks. This research contributes to the existing literature on financial technologies and investors by examining the impact of APIs as a new type of financial information dissemination, and by documenting the consequences of their use. The key findings of this study will have significant implications for both investors and policymaker in the stock market.

목차

Extended Abstract
References

저자

• Jiung Jang [ Korea University Business School ]
• Gunwoong Lee [ Korea University Business School ]

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