Munich Personal RePEc Archive

Superstition and financial decision making

Hirshleifer, David and Jian, Ming and Zhang, Huai (2014): Superstition and financial decision making.

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Abstract

In Chinese culture, certain digits are lucky and others unlucky. We test how such numerological superstition affects financial decision in the China IPO market. We find that the frequency of lucky numerical stock listing codes exceeds what would be expected by chance. Also consistent with superstition effects, newly listed firms with lucky listing codes are initially traded at a premium after controlling for known determinants of valuation multiples, the lucky number premium dissipates within three years of the IPO, and lucky number firms experience inferior post-IPO abnormal returns.

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