Superstition and Financial Decision Making

2016/11/18 by David Hirshleifer, Ming Jian, Huai Zhang
Psychology · #Paranormal Experiences and Beliefs

paper · doi:10.1287/mnsc.2016.2584

Abstract

In Chinese culture, certain digits are lucky and others unlucky. We test how such numerological superstition affects financial decision in the China initial public offering (IPO) market. We find that the frequency of lucky numerical stock listing codes exceeds what would be expected by chance. Also consistent with superstition effects, newly listed firms with lucky listing codes experience inferior post-IPO abnormal returns. Further tests suggest that our conclusions are not driven by endogeneity. This paper was accepted by Lauren Cohen, finance.

Citations

• Believe It Or Not: Religious and Other Paranormal Beliefs in the United States
• Investor Psychology and Security Market Under‐ and Overreactions

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