Culture and the disposition effect

Bastian Breitmayer; Tim Hasso; Matthias Pelster

doi:10.1016/j.econlet.2019.108653

Culture and the disposition effect

Bastian Breitmayer, Tim Hasso, Matthias Pelster

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Abstract

We study the relationship between national culture and the disposition effect by investigating international differences in the degree of investors’ disposition effect. We utilize brokerage data of 387,993 traders from 83 countries and find great variation in the degree of the disposition effect across the world. We find that the cultural dimensions of long-term orientation and indulgence help to explain why certain nationalities are more prone to the disposition effect. We also find support on an international level for the role of age and gender in explaining the disposition effect.

Original language	English
Article number	108653
Number of pages	11
Journal	Economics Letters
Volume	184
Early online date	29 Aug 2019
DOIs	https://doi.org/10.1016/j.econlet.2019.108653
Publication status	Published - Nov 2019

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AB - We study the relationship between national culture and the disposition effect by investigating international differences in the degree of investors’ disposition effect. We utilize brokerage data of 387,993 traders from 83 countries and find great variation in the degree of the disposition effect across the world. We find that the cultural dimensions of long-term orientation and indulgence help to explain why certain nationalities are more prone to the disposition effect. We also find support on an international level for the role of age and gender in explaining the disposition effect.

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Culture and the disposition effect

Abstract

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