The trading response of individual investors to local bankruptcies

• 成果类型: Article
• 署名作者: Laudenbach, Christine; Loos, Benjamin; Pirschel, Jenny; Wohlfart, Johannes
• 署名单位: University of Bonn; Technical University of Munich; Danish Finance Institute; University of Copenhagen; University of Copenhagen; Danish Finance Institute
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2021.06.033
• 发表日期: 2021
• 页码: 928-953
• 关键词: individual investors; risk taking; TRADING; experiences

摘要

We examine how adverse local experiences that are uninformative of future returns affect households' investment behavior in the short term. Using data from a German online brokerage and a survey, we show that retail investors sharply reduce risk taking in response to nearby firm bankruptcies. Adjustments in risk taking occur through immediate and transitory increases in trading, and work through more pessimistic expectations about aggregate stock returns and increased risk aversion. Changes in background risks or wealth effects cannot explain our findings. Extrapolation from local experiences to aggregate expectations is inconsistent with optimal use of full or limited information. (c) 2021 Published by Elsevier B.V.