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Primacy in stock market participation : the effect of initial returns on market re-entry decisions
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Arikan, O., Gozluklu, Arie Eskenazi, Kim, Gi Hyun and Sakaguchi, H. (2019) Primacy in stock market participation : the effect of initial returns on market re-entry decisions. European Journal of Finance, 25 (10). pp. 883-909. doi:10.1080/1351847X.2018.1459764 ISSN 1351-847X.
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Official URL: https://doi.org/10.1080/1351847X.2018.1459764
Abstract
We examine whether initial returns influence investors’ decisions to return to the stock market following withdrawal. Using a survival analysis technique to estimate Finnish retail investors’ likelihood of stock market re-entry reveals that investors who experience lower initial returns are less likely to return, even after controlling for returns in the last month and average monthly returns for the duration of investing. This primacy effect is robust to accounting for endogeneity in investors’ exit decisions, and other behavioural biases such as recency and saliency of investment experience. Individual investors appear to be subject to primacy bias and tend to put a significant weight on initial experiences in re-entry decisions.
Item Type: | Journal Article | ||||||||
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Divisions: | Faculty of Social Sciences > Warwick Business School > Finance Group | ||||||||
Journal or Publication Title: | European Journal of Finance | ||||||||
Publisher: | Routledge Journals, Taylor & Francis Ltd. | ||||||||
ISSN: | 1351-847X | ||||||||
Official Date: | 2019 | ||||||||
Dates: |
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Volume: | 25 | ||||||||
Number: | 10 | ||||||||
Page Range: | pp. 883-909 | ||||||||
DOI: | 10.1080/1351847X.2018.1459764 | ||||||||
Status: | Peer Reviewed | ||||||||
Publication Status: | Published | ||||||||
Access rights to Published version: | Restricted or Subscription Access | ||||||||
Date of first compliant deposit: | 27 March 2018 | ||||||||
Date of first compliant Open Access: | 10 October 2019 |
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