What Drives Individual Investors in the Bear Market?

Xu, R.; Liu, Y.; Hu, N.; Guo, M.

doi:10.1016/j.bar.2022.101113

What Drives Individual Investors in the Bear Market?

Xu, R.; Liu, Y.; Hu, N.; Guo, M.

Authors

R. Xu

Y. Liu

N. Hu

Professor Michael Guo jie.guo@durham.ac.uk
Professor

Abstract

This study uses a unique dataset from a large anonymous brokerage firm to examine the net investment of individual investors during a bear market. The study’s empirical evidence reveals that individual investors provide liquidity by acting as net buyers. Particularly, male and younger investors tend to have a higher buying intensity than the others during the market downturn. Besides, better performances when the market crashed encourage investors to be overconfident, thus exhibiting self-attribution bias since we do not find similar results in the bull-market subsample. Results from the stock-level analysis imply that investors tend to buy stocks with worse short-term past performance, higher liquidity, and larger market capitalization. Our findings on the individual investor trading behaviour cannot be explained by either a superior stock-picking ability or a higher tendency to gamble during the market downswing.

Citation

Xu, R., Liu, Y., Hu, N., & Guo, M. (2022). What Drives Individual Investors in the Bear Market?. The British Accounting Review, Article 101113. https://doi.org/10.1016/j.bar.2022.101113

Journal Article Type	Article
Acceptance Date	Jun 15, 2022
Online Publication Date	Jun 21, 2022
Publication Date	2022
Deposit Date	Jun 26, 2022
Publicly Available Date	Jun 22, 2024
Journal	The British Accounting Review
Print ISSN	0890-8389
Publisher	Elsevier
Peer Reviewed	Peer Reviewed
Article Number	101113
DOI	https://doi.org/10.1016/j.bar.2022.101113
Public URL	https://durham-repository.worktribe.com/output/1200100