Superstition and Financial Decision Making

Hirshleifer, David; Jian, Meng; Zhang, Huai

doi:10.1287/mnsc.2016.2584

Cited by 100 publications

(54 citation statements)

References 63 publications

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“…14 In financial markets, there is limited evidence that numerical superstitious beliefs matter. 15 Hirshleifer, Jian, and Zhang (2016) find that newly listed Chinese firms are more likely to have lucky numbers in their listing codes. The firms with lucky listing codes are traded at a premium and experience inferior post-IPO abnormal returns.…”

Section: A Limit Orders Submitted At Prices Ending With Lucky and Unmentioning

confidence: 99%

Do Superstitious Traders Lose Money?

et al. 2018

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Do superstitious traders lose money?We answer this question in the context of trading in the Taiwan Futures Exchange, where we exploit the Chinese superstition that the number "8" is lucky and the number "4" is unlucky. We find that individual investors, but not institutional investors, submit disproportionately more limit orders at "8" than at "4." This imbalance, defined as "superstition index" for each investor, is positively correlated with trading losses. Superstitious investors lose money mainly because of their bad market timing and stale orders. Nevertheless, the reliance on number superstition for limit order submissions does decrease with trading experience. AbstractDo superstitious traders lose money? We answer this question in the context of trading in the Taiwan Futures Exchange, where we exploit the Chinese superstition that the number "8" is lucky and the number "4" is unlucky. We find that individual investors, but not institutional investors, submit disproportionately more limit orders at "8" than at "4." This imbalance, defined as "superstition index" for each investor, is positively correlated with trading losses. Superstitious investors lose money mainly because of their bad market timing and stale orders. Nevertheless, the reliance on number superstition for limit order submissions does decrease with trading experience.

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Section: A Limit Orders Submitted At Prices Ending With Lucky and Unmentioning

confidence: 99%

Do Superstitious Traders Lose Money?

et al. 2018

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“…Brown et al (2002) and Brown and Mitchell (2008) discovered that the daily opening and closing prices tend to cluster at the number "8" in Asian Pacific and Chinese Stock markets. Hirshleifer et al (2018) found that the superstition affected the pricing of initial public offerings in China in the period of 1991-2005. On Shanghai and Shenzhen stock exchanges, listed companies are identified by a numerical code, which is the equivalent of the US ticker.…”

Section: Literature Reviewmentioning

confidence: 99%

Should Investors on Equity Markets Be Superstitious? (Example of 7 World Stock Indexes Components)

Borowski¹

2018

IJEF

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The problem of efficiency of financial markets, especially the weekend effect has always fascinated scholars and practitioners due to its relationship with the financial market efficiency. The issue is significant from the point of view of assessing the portfolio management effectiveness and behavioral finance. This paper tests the hypothesis of the unfortunate dates effect upon 7 equity indexes components (CAC40, DAX, DJIA, FTSE30, FTSEBIT, NIKKEI225 and SENSE), i.e. 419 companies. For all these equities the following rates of return were analyzed: Close-close, Overnight, Open-open, Open-close. As unfortunate days, the sessions falling on the following dates were selected: 13th and 4th day of the month, Friday the 13th and Tuesday the 13th. The research proved the presence of all kinds of the “unfortunate dates” effects on analyzed markets. The effects were registered for all analyzed rates of return. The most dominating “unfortunate dates effects” resulted to be Tuesday the 13th, proceeding the 4th day of the month effect. This is the first analysis of the presence of the “unfortunate dates effect”, in which other than Close-close returns were examined and fulfils the research gap. 

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“…(2009) found that companies with meaningful tickers such as SLOT and ODDS, in the case of casinos, perform better than similar companies with regular tickers. Utilizing the unique feature of the Chinese stock market, namely, that tickers have a numeric form (for example, Bank of China stock is traded in Shanghai under the ticker "601988") and the prevalence of numerical superstition beliefs in China (digits 6,8,9 are considered lucky because their pronunciations sound are similar to positive words such as "longevity" and "prosper", while 4 is associated with the word "death" and considered unlucky), Hirshleifer et al (2016) found that superstition affects stock market returns. Newly listed Chinese companies with lucky tickers are traded at a premium of over 20%, which dissipates within three years after the IPO leading to underperformance of these companies.…”

Section: All Available Informationmentioning

confidence: 99%

Behavioral Finance: History and Foundations

Illiashenko

2017

Visn. Nat. Bank Ukr.

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Superstition and Financial Decision Making

Cited by 100 publications

References 63 publications

Do Superstitious Traders Lose Money?

Do Superstitious Traders Lose Money?

Should Investors on Equity Markets Be Superstitious? (Example of 7 World Stock Indexes Components)

Behavioral Finance: History and Foundations

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