Retail trading activity and major lifecycle events: The case of divorce

Andrew Grant, Petko S. Kalev, Avanidhar Subrahmanyam and P. Joakim Westerholm

Journal of Banking & Finance, 2022, vol. 135, issue C

Abstract: How are trading activity and performance impacted by material events during individual investors’ lifetimes? Using a unique dataset, we identify transfers of common stock initiated by the major event of divorce and analyze trading patterns and performance of divorced traders. In aggregate, divorcing individuals underperform, and part of this underperformance is due to liquidation needs arising from divorce. Cross-sectionally, however, actively-trading divorced investors demonstrate superior performance in the window surrounding divorce settlement, while underperforming just prior to divorce. This result survives a difference-in-differences analysis based on a propensity-score matched sample of non-divorced investors. Our analysis thus suggests that the life-cycle distraction of divorce temporarily reduces the performance of active retail traders, which improves once the stressor is removed.

Keywords: Individual investors; Divorce performance; Trading behavior (search for similar items in EconPapers)
JEL-codes: G11 G41 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0378426621003459
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:135:y:2022:i:c:s0378426621003459

DOI: 10.1016/j.jbankfin.2021.106394

Access Statistics for this article

Journal of Banking & Finance is currently edited by Ike Mathur

More articles in Journal of Banking & Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu ().