Is the Aggregate Investor Reluctant to Realise Losses? Evidence from Taiwan
Abstract"We ask whether the typical investor and the aggregate investor exhibit a bias known as the disposition effect, the tendency to sell investments that are held for a profit at a faster rate than investments held for a loss. We analyse all trading activity on the Taiwan Stock Exchange (TSE) for the five years ending in 1999. Using a dataset that contains all trades (over one billion) and the identity of every trader (nearly four million), we find that in aggregate, investors in Taiwan are about twice as likely to sell a stock if they are holding that stock for a gain rather than a loss. Eighty-four percent of all Taiwanese investors sell winners at a faster rate than losers. Individuals, corporations, and dealers are reluctant to realise losses, while mutual funds and foreigners, who together account for less than 5% of all trades (by value), are not." Copyright 2007 The Authors Journal compilation (c) 2007 Blackwell Publishing Ltd.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by European Financial Management Association in its journal European Financial Management.
Volume (Year): 13 (2007)
Issue (Month): 3 ()
Contact details of provider:
Web page: http://www.blackwellpublishing.com/journal.asp?ref=1354-7798
More information through EDIRC
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Pereira Reichhardt, Joaquín & Iqbal, Tabassum, 2014. "Investment Decisions: Are we fully-Rational?," MPRA Paper 57686, University Library of Munich, Germany.
- Patrick Roger, 2012. "Portfolio diversification dynamics of individual investors: a new measure of investor sentiment," Working Papers of LaRGE Research Center 2012-01, Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg.
- Erdem, Orhan & Yüksel, Serkan & Arık, Evren, 2013.
"Trading Puzzle, Puzzling Trade,"
46804, University Library of Munich, Germany, revised 21 Feb 2013.
- Orhan Erdem & Evren Arik & Serkan YÃ¼ksel, 2013. "Trading Puzzle, Puzzling Trade," Working Paper, Research and Business Development Department, Borsa Istanbul 05, Research and Business Development Department, Borsa Istanbul.
- Boolell-Gunesh S. & Broihanne M-H. & Merli M., 2008. "Are French Individual Investors reluctant to realize their losses?," Working Papers of LaRGE Research Center 2008-09, Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg.
- Chuang, Wen-I & Susmel, Rauli, 2011. "Who is the more overconfident trader? Individual vs. institutional investors," Journal of Banking & Finance, Elsevier, vol. 35(7), pages 1626-1644, July.
- Barber, Brad M. & Lee, Yi-Tsung & Liu, Yu-Jane & Odean, Terrance, 2014. "The cross-section of speculator skill: Evidence from day trading," Journal of Financial Markets, Elsevier, Elsevier, vol. 18(C), pages 1-24.
- Selim Aren & Lutfihak Alpkan & Bulent Sezen & Ziya Alper Guncu, 2011. "Drivers of firmsâ€™ debt ratios: evidence from Taiwanese and Turkish firms," Journal of Business Economics and Management, Taylor & Francis Journals, Taylor & Francis Journals, vol. 13(1), pages 53-70, May.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.