Investor characteristics and the disposition effect

Alex Frino, Grace Lepone and Danika Wright

Pacific-Basin Finance Journal, 2015, vol. 31, issue C, 1-12

Abstract: This paper studies the prevalence of the disposition effect in individual traders in the Australian equities market. In particular, we examine the effect of demographics and Chinese ethnicity on trading behaviour. The relationship between ethnic background and trading behaviour has not previously been studied in a multicultural market. Robust evidence of the disposition effect is found across different investor categories using a large sample of individual investor accounts at a leading local retail brokerage. However, the disposition effect is more prevalent in investors of Chinese background, as well as women and older investors. Further, other behavioural biases are found to be predictors of the disposition effect, including frequent trading, round size trading heuristics, and the investor's level of portfolio diversification.

Keywords: Disposition effect; Behavioural finance; Investor characteristics; Loss aversion; Chinese investors (search for similar items in EconPapers)
JEL-codes: G11 G14 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (16)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:31:y:2015:i:c:p:1-12

DOI: 10.1016/j.pacfin.2014.10.009

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