The trading response of individual investors to local bankruptcies
Publikation: Bidrag til tidsskrift › Tidsskriftartikel › Forskning › fagfællebedømt
Dokumenter
- CEBI_WP_08-20
Indsendt manuskript, 5,49 MB, PDF-dokument
We examine how adverse local experiences that are uninformative of future returns affect households’ investment behavior in the short term. Using data from a German online brokerage and a survey, we show that retail investors sharply reduce risk taking in response to nearby firm bankruptcies. Adjustments in risk taking occur through immediate and transitory increases in trading, and work through more pessimistic expectations about aggregate stock returns and increased risk aversion. Changes in background risks or wealth effects cannot explain our findings. Extrapolation from local experiences to aggregate expectations is inconsistent with optimal use of full or limited information.
Originalsprog | Engelsk |
---|---|
Tidsskrift | Journal of Financial Economics |
Vol/bind | 142 |
Udgave nummer | 2 |
Sider (fra-til) | 928-953 |
Antal sider | 26 |
ISSN | 0304-405X |
DOI | |
Status | Udgivet - nov. 2021 |
Bibliografisk note
Publisher Copyright:
© 2021
Antal downloads er baseret på statistik fra Google Scholar og www.ku.dk
ID: 287880456