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Till death (or divorce) do us part: early-life family disruption and investment behavior

Accepted version
Peer-reviewed

Type

Article

Change log

Authors

Betzer, A 
Limbach, P 
Rau, PR 
Schurmann, H 

Abstract

We document a long-lasting association between a common societal phenomenon, early-life family disruption, and investment behavior. Controlling for socioeconomic status and family background, we find fund managers who experienced the death or divorce of their parents during childhood exhibit a stronger disposition effect, take lower risk, and are more likely to sell their holdings following risk-increasing firm events. The results are consistent with persistent symptoms of post-traumatic stress and strengthen as treatment intensifies. The evidence adds to our understanding of the role of social factors and “nurture” in finance as well as the origin of investment biases.

Description

Keywords

3502 Banking, Finance and Investment, 35 Commerce, Management, Tourism and Services, Pediatric, Behavioral and Social Science

Journal Title

Journal of Banking and Finance

Conference Name

Journal ISSN

0378-4266

Volume Title

Publisher

Elsevier