How speculative asset characteristics shape retail investors' selling behavior

Sabine Esther Bernard, Martin Weber and Benjamin Loos

No 378, SAFE Working Paper Series from Leibniz Institute for Financial Research SAFE

Abstract: Using German and US brokerage data we find that investors are more likely to sell speculative stocks trading at a gain. Investors' gain realizations are monotonically increasing in a stock's speculativeness. This translates into a high disposition effect for speculative and a much lower disposition effect for non-speculative stocks. Our findings hold across asset classes (stocks, passive, and active funds) and explain cross-sectional differences in investor selling behavior which previous literature attributed primarily to investor demographics. Our results are robust to rank or attention effects and can be linked to realization utility and rolling mental account.

Keywords: Selling Behavior; Disposition Effect; Retail Investor; Speculation; Higher Moments of Return; Realization Utility (search for similar items in EconPapers)
JEL-codes: D14 D81 D9 G11 (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-mst and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/268406/1/1831888238.pdf (application/pdf)

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:zbw:safewp:378

Access Statistics for this paper

More papers in SAFE Working Paper Series from Leibniz Institute for Financial Research SAFE Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().