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Superstitions and stock trading: some new evidence

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  • Richard Chung
  • Ali F. Darrat
  • Bin Li

Abstract

We examine the potential effect of superstitious beliefs on stock trading in four Asian-Pacific countries with deep Chinese cultural heritage (China, Hong Kong, Singapore, and Taiwan). We focus on market responses to days that are superstitiously deemed in the Chinese cultural as either lucky or unlucky. Our regression results from daily data over 2 January 1991 to 30 December 2011 suggest that unlucky days (particularly day 4 and Friday the 13th) generally exhibit higher stock returns. However, our results remain generally consistent with market efficiency since a trading rule based on this numbering pattern fails to produce any significant abnormal profits after taking into account transaction costs.

Suggested Citation

  • Richard Chung & Ali F. Darrat & Bin Li, 2014. "Superstitions and stock trading: some new evidence," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 19(4), pages 527-538, October.
    • Handle: RePEc:taf:rjapxx:v:19:y:2014:i:4:p:527-538
    DOI: 10.1080/13547860.2014.920589
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    References listed on IDEAS

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    1. David Hirshleifer & Tyler Shumway, 2003. "Good Day Sunshine: Stock Returns and the Weather," Journal of Finance, American Finance Association, vol. 58(3), pages 1009-1032, June.
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    4. Mark J. Kamstra & Lisa A. Kramer & Maurice D. Levi, 2003. "Winter Blues: A SAD Stock Market Cycle," American Economic Review, American Economic Association, vol. 93(1), pages 324-343, March.
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    6. Brown, Philip & Mitchell, Jason, 2008. "Culture and stock price clustering: Evidence from The Peoples' Republic of China," Pacific-Basin Finance Journal, Elsevier, vol. 16(1-2), pages 95-120, January.
    7. Kolb, Robert W & Rodriguez, Ricardo J, 1987. "Friday the Thirteenth: 'Part VII'--A Note," Journal of Finance, American Finance Association, vol. 42(5), pages 1385-1387, December.
    8. Jorge Brusa & Pu Liu, 2004. "The Day-of-the-Week and the Week-of-the-Month Effects: An Analysis of Investors' Trading Activities," Review of Quantitative Finance and Accounting, Springer, vol. 23(1), pages 19-30, July.
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    Cited by:

    1. Jan Fidrmuc & J. D. Tena, 2015. "Friday the 13th: The Empirics of Bad Luck," Kyklos, Wiley Blackwell, vol. 68(3), pages 317-334, August.
    2. Krzysztof Borowski, 2019. "Should Investors on Equity Markets Be Superstitious? (Example of 7 World Stock Indexes Components)," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 11(1), pages 151-174, January.

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