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Subjective return expectations, information and stock market participation: evidence from France

Listed author(s):
  • Arrondel, Luc
  • Calvo-Pardo, Hector

Recent research has separately uncovered that stock ownership strongly correlates with both expectations and realizations of stock market returns, as well as with measures of financial literacy, ability or trust. This paper reconciles all, and reports new findings from a unique survey containing individual level data on both expectations and (knowledge of) realizations for a representative sample by age and wealth. Stock market participation monotonically increases with the conditional expectation of a positive stock market return, even among the a­ uent and the young. Information is very heterogeneous, increases with age and own past experience, andidentifies a causal effect of expectations on stock ownership.

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File URL: https://eprints.soton.ac.uk/368212/1/1415%2520combined.pdf
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Paper provided by Economics Division, School of Social Sciences, University of Southampton in its series Discussion Paper Series In Economics And Econometrics with number 1415.

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Date of creation: 14 Mar 2014
Handle: RePEc:stn:sotoec:1415
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  1. Luigi Guiso & Paola Sapienza & Luigi Zingales, 2008. "Trusting the Stock Market," Journal of Finance, American Finance Association, vol. 63(6), pages 2557-2600, December.
  2. Luigi Guiso & Tullio Jappelli, 2005. "Awareness and Stock Market Participation," Review of Finance, European Finance Association, vol. 9(4), pages 537-567.
  3. Paul A. Samuelson, 2011. "Lifetime Portfolio Selection by Dynamic Stochastic Programming," World Scientific Book Chapters,in: THE KELLY CAPITAL GROWTH INVESTMENT CRITERION THEORY and PRACTICE, chapter 31, pages 465-472 World Scientific Publishing Co. Pte. Ltd..
  4. Jeff Dominitz & Charles F. Manski, 2007. "Expected Equity Returns and Portfolio Choice: Evidence from the Health and Retirement Study," Journal of the European Economic Association, MIT Press, vol. 5(2-3), pages 369-379, 04-05.
  5. Annamaria Lusardi, 2008. "Financial Literacy: An Essential Tool for Informed Consumer Choice?," NFI Working Papers 2008-WP-13, Indiana State University, Scott College of Business, Networks Financial Institute.
  6. Harrison Hong & Jeffrey D. Kubik & Jeremy C. Stein, 2004. "Social Interaction and Stock-Market Participation," Journal of Finance, American Finance Association, vol. 59(1), pages 137-163, 02.
  7. Merton, Robert C, 1969. "Lifetime Portfolio Selection under Uncertainty: The Continuous-Time Case," The Review of Economics and Statistics, MIT Press, vol. 51(3), pages 247-257, August.
  8. repec:dau:papers:123456789/6829 is not listed on IDEAS
  9. Mark Grinblatt & Matti Keloharju & Juhani Linnainmaa, 2011. "IQ and Stock Market Participation," Journal of Finance, American Finance Association, vol. 66(6), pages 2121-2164, December.
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