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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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
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:	Date Event 2019 Published 10 April 2018 Available 26 March 2018 Accepted
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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