Tracking investor gambling intensity

Zhu, Hongbing; Yang, Lihua; Xu, Changxin

doi:10.1016/j.irfa.2022.102468

Cited by 2 publications

(1 citation statement)

References 54 publications

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“…Based on the theory of explicit preference, Zhu et al (2021) constructed an index of investor's gambling preference and discovered that the more retail investors gamble, the more they lose. Zhu et al (2023) documented that investor gambling intensity is strongly persistent and significantly predicts future stock returns. Specifically, stocks with high aggregate gambling intensity underperform stocks with low aggregate gambling intensity by approximately 117 basis points over the following month.…”

Section: Gambling Preferences In Chinese Stock Marketsmentioning

confidence: 99%

Investor gambling preferences and stock returns: evidence from the Shanghai A-share markets

2023

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PurposeThis study aims to examine the relationship between investor gambling preferences and stock returns, using data for all firms listed in Shanghai A-share market during 2016 and 2021.Design/methodology/approachThis study employs price and trading volume data to capture the behavioral characteristics and gambling preferences of investors. Using the Fama-French three-factor and five-factor models to estimate benchmark returns, this study investigates whether investing in gambling stocks can yield positive excess returns.FindingsThe study reveals that stocks identified as gambling stocks generate high returns in the month they are identified as such but subsequently experience a significant drop in excess returns compared to non-gambling stocks over the following one to six months. These results are found to be consistent across different methods used to classify gambling stocks and across various industry sectors.Research limitations/implicationsThis research provides insights into the risk-return tradeoff of different stock types and the factors that fuel irrational investment behavior. This research underscores the importance of considering the behavioral elements of investment, particularly in emerging markets where individual investors have a significant impact.Practical implicationsThis study advises investors to avoid adopting a gambler or speculative mindset and instead make well-informed and calculated investment decisions that are in line with investors financial objectives and risk appetite. This approach can help create a more stable and sustainable financial market.Originality/valueThis study provides new evidence on the relationship between gambling preferences and future stock returns in financial markets and sheds new light on the important role of irrational factors in investment decisions.

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Section: Gambling Preferences In Chinese Stock Marketsmentioning

confidence: 99%

Investor gambling preferences and stock returns: evidence from the Shanghai A-share markets

2023

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The individual motivation of investors' gambling mentality: Empirical evidence from gambling sentiment and lottery‐type stocks

Long,

Wang,

et al. 2024

Accounting & Finance

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We construct a measure of public gambling sentiment using the Baidu index and empirically examine the influence of temporal fluctuations in gambling sentiment on the performance of lottery‐type stocks. The empirical findings reveal that heightened gambling sentiment correlates with increased selling volume, short‐term order imbalances and liquidity in the lottery‐type stock market, while diminishing abnormal returns, including the initial returns of IPOs. We attribute this to investors' gambling mentality stemming from the accumulation of wealth rather than the pursuit of excitement, as they view lotteries and lottery‐related stocks as interchangeable investment options.

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Tracking investor gambling intensity

Cited by 2 publications

References 54 publications

Investor gambling preferences and stock returns: evidence from the Shanghai A-share markets

Investor gambling preferences and stock returns: evidence from the Shanghai A-share markets

The individual motivation of investors' gambling mentality: Empirical evidence from gambling sentiment and lottery‐type stocks

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