We found a match
Your institution may have access to this item. Find your institution then sign in to continue.
- Title
Pollution and Performance: Do Investors Make Worse Trades on Hazy Days?
- Authors
Huang, Jiekun; Xu, Nianhang; Yu, Honghai
- Abstract
This paper examines the relation between air pollution and individual investors' trading behavior and performance. Using unique data on stock trades by 87,504 individuals from 34 cities in China, we find a negative relation between air pollution and trade performance. This result is obtained after controlling for investor-year fixed effects and date fixed effects, as well as local weather conditions. More strikingly, abnormal trade performance decreases monotonically with the levels indicating the severity of air pollution. Furthermore, we find evidence suggesting that air pollution makes investors more susceptible to the disposition effect and attention-driven buying behavior. Overall, the results highlight a hitherto-unexplored cost that ambient air pollution imposes on stock market investors. This paper was accepted by Tylor Shumway, finance.
- Subjects
CHINA; INDIVIDUAL investors; AIR pollution; POLLUTION; INVESTORS; STOCK exchanges
- Publication
Management Science, 2020, Vol 66, Issue 10, p4455
- ISSN
0025-1909
- Publication type
Article
- DOI
10.1287/mnsc.2019.3402