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Superstition and Financial Decision Making

Author

Listed:
  • David Hirshleifer

    (Merage School of Business, University of California, Irvine, Irvine, California 92617)

  • Ming Jian

    (Nanyang Business School, Nanyang Technological University, Singapore 639798)

  • Huai Zhang

    (Nanyang Business School, Nanyang Technological University, Singapore 639798)

Abstract

In Chinese culture, certain digits are lucky and others unlucky. We test how such numerological superstition affects financial decision in the China initial public offering (IPO) market. We find that the frequency of lucky numerical stock listing codes exceeds what would be expected by chance. Also consistent with superstition effects, newly listed firms with lucky listing codes experience inferior post-IPO abnormal returns. Further tests suggest that our conclusions are not driven by endogeneity.

Suggested Citation

  • David Hirshleifer & Ming Jian & Huai Zhang, 2018. "Superstition and Financial Decision Making," Management Science, INFORMS, vol. 64(1), pages 235-252, January.
    • Handle: RePEc:inm:ormnsc:v:64:y:2018:i:1:p:235-252
    DOI: 10.1287/mnsc.2016.2584
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    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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