Superstition and stock price crash risk

Min Bai, Limin Xu, Chia-Feng (Jeffrey) Yu () and Ralf Zurbruegg

Pacific-Basin Finance Journal, 2020, vol. 60, issue C

Abstract: We investigate a new channel that leads to firm-specific stock price crash risk. By using Chinese superstition towards unlucky numbers as a platform for our analysis, we find that investor overreaction to negative news from firms with unlucky listing codes is a mechanism through which superstition affects crash risk. We also show that the effect of superstition on crash risk is more pronounced during volatile periods, down markets, and for more opaque firms. Our results suggest that superstition acts as a substitute for information and leads to adverse consequences when investors are faced with greater uncertainty.

Keywords: Firm-specific stock price crash risk; Superstition; Investor overreaction (search for similar items in EconPapers)
JEL-codes: G32 G41 M41 Z13 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:60:y:2020:i:c:s0927538x19302598

DOI: 10.1016/j.pacfin.2020.101287

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