The individual motivation of investors' gambling mentality: Empirical evidence from gambling sentiment and lottery‐type stocks

Zewei Long, Wei Wang, Haohua Li and Xinghao Huang

Accounting and Finance, 2024, vol. 64, issue 5, 4515-4536

Abstract: We construct a measure of public gambling sentiment using the Baidu index and empirically examine the influence of temporal fluctuations in gambling sentiment on the performance of lottery‐type stocks. The empirical findings reveal that heightened gambling sentiment correlates with increased selling volume, short‐term order imbalances and liquidity in the lottery‐type stock market, while diminishing abnormal returns, including the initial returns of IPOs. We attribute this to investors' gambling mentality stemming from the accumulation of wealth rather than the pursuit of excitement, as they view lotteries and lottery‐related stocks as interchangeable investment options.

Date: 2024
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https://doi.org/10.1111/acfi.13271

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