"This paper examines whether socio-economic and psychological factors, which are known to influence lottery purchases, lead to excess investment in lottery-type stocks. The results indicate that, unlike institutional investors, individual investors prefer stocks with lottery-type features. The demand for lottery-type stocks increases during bad economic times and demand shifts influence the returns and idiosyncratic volatility of those stocks. In the cross-section, factors which induce greater expenditure in lotteries also induce greater investment in lottery-type stocks. Poor, young, less educated men who live in urban, Republican dominated regions and belong to specific minority (African American and Hispanic) and religious (Catholic) groups invest more in lottery-type stocks. As expected, investors who exhibit stronger preference for lottery-type stocks experience greater mean under performance. Collectively, the evidence indicates that people's attitudes toward gambling are reflected in their stock investment choices and stock returns"
Interesting paper and thanks to finance professor for the link. Finance Professor
No comments:
Post a Comment