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Religious beliefs, gambling attitudes, and financial market outcomes

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  • Kumar, Alok
  • Page, Jeremy K.
  • Spalt, Oliver G.

Abstract

This study investigates whether geographic variation in religion-induced gambling norms affects aggregate market outcomes. We conjecture that gambling propensity would be stronger in regions with higher concentrations of Catholics relative to Protestants. Consistent with our conjecture, we show that in regions with higher Catholic–Protestant ratios, investors exhibit a stronger propensity to hold lottery-type stocks, broad-based employee stock option plans are more popular, the initial day return following an initial public offering is higher, and the magnitude of the negative lottery-stock premium is larger. Collectively, these results indicate that religion-induced gambling attitudes impact investors' portfolio choices, corporate decisions, and stock returns.

Suggested Citation

  • Kumar, Alok & Page, Jeremy K. & Spalt, Oliver G., 2011. "Religious beliefs, gambling attitudes, and financial market outcomes," Journal of Financial Economics, Elsevier, vol. 102(3), pages 671-708.
  • Handle: RePEc:eee:jfinec:v:102:y:2011:i:3:p:671-708
    DOI: 10.1016/j.jfineco.2011.07.001
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    More about this item

    Keywords

    Gambling; Religion; Institutional investors; Employee stock option plans; IPOs;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • Z12 - Other Special Topics - - Cultural Economics - - - Religion

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