What drives individual investors in the bear market?

Xu, R., Liu, Y., Hu, N. and Guo, J. (M.) (2022) What drives individual investors in the bear market? British Accounting Review, 54(6), 101113. (doi: 10.1016/j.bar.2022.101113)

Abstract

This study uses a unique dataset from a large anonymous brokerage firm to examine the net investment of individual investors during a bear market. The study’s empirical evidence reveals that individual investors provide liquidity by acting as net buyers. Particularly, male and younger investors tend to have a higher buying intensity than the others during the market downturn. Besides, better performances when the market crashed encourage investors to be overconfident, thus exhibiting self-attribution bias since we do not find similar results in the bull-market subsample. Results from the stock-level analysis imply that investors tend to buy stocks with worse short-term past performance, higher liquidity, and larger market capitalization. Our findings on the individual investor trading behaviour cannot be explained by either a superior stock-picking ability or a higher tendency to gamble during the market downswing.

• Item Type: Articles
• Status: Published
• Refereed: Yes
• Glasgow Author(s) Enlighten ID: Hu, Dr Nan
• Authors: Xu, R., Liu, Y., Hu, N., and Guo, J. (M.)
• College/School: College of Social Sciences > Adam Smith Business School > Accounting and Finance
• Journal Name: British Accounting Review
• Publisher: Elsevier
• ISSN: 0890-8389
• ISSN (Online): 1095-8347
• Published Online: 21 June 2022
• Copyright Holders: Copyright © 2022 British Accounting Association
• First Published: First published in British Accounting Review 54(6): 101113
• Publisher Policy: Reproduced in accordance with the publisher copyright policy