Stock Market Ownership Transitions

Yosef Bonaparte (), George M. Korniotis (), Alok Kumar (), Alexander Michaelides () and Yuxin Zhang ()
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Yosef Bonaparte: Finance, CU Denver Business School, University of Colorado Denver, Denver, Colorado 80202
George M. Korniotis: Finance, Miami Herbert Business School, University of Miami, Miami, Florida 33124
Alok Kumar: Finance, Miami Herbert Business School, University of Miami, Miami, Florida 33124
Alexander Michaelides: Finance, Imperial College London, London, Greater London SW72AZ, United Kingdom
Yuxin Zhang: Finance, Accounting and Economics, Nottingham University Business School (China), University of Nottingham, Ningbo, Zhejiang 315104, China

Management Science, 2025, vol. 71, issue 6, 4977-5000

Abstract: A significant portion of U.S. households enters and exits investment accounts. Empirically, income and wealth changes are related to these transitions, with income changes not affecting the retired. A life cycle model with participation costs cannot match the observed ownership dynamics, but an extension with stock market crash better fits the average participation rate and ownership transitions of the middle-aged and retired. This extended model does not match the ownership dynamics of the young, which are better captured by a model with elevated income risk. Overall, these findings indicate that ownership transitions respond to wealth shocks across the life cycle, both in our model and the data.

Keywords: stock market transitions; trading costs; life cycle portfolio decisions; rare disaster; income and wealth shocks (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:71:y:2025:i:6:p:4977-5000

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