Ranking and Salience


Professor Baolian Wang is an assistant professor at the Gabelli School of  Business, Fordham University. He received his Ph.D. in Finance from  Hong Kong University of Science and Technology (HKUST) and joined Fordham University in 2014. He was a Visiting Assistant Professor at Ohio State University from July 2014 to Dec 2014. Baolian’s research interests include empirical asset pricing, investor behavior, and international finance. He has published several papers in academic finance journals such as Review of Financial Studies and Journal of Financial Economics. He has won the best paper prize in ECCCS Workshop on Governance and Control.


 We investigate the economic consequences of stock ranking using a novel natural experiment in which stock ranking is due to the rounding of stock prices. The results show that ranking a stock in a more salient place can increase its return volatility, trading volume, liquidity, and cause higher short-term stock returns and an eventual reversal. Ranking only matters when it affects investor attention. The ranking effect is stronger when more stocks are on the list. Further, small investors are more affected by ranking. Overall, the evidence shows that uninformed ranking can cause correlated investor trading and have significant economic consequences.