Topic: Missing Women: Infectious disease outbreaks and disposition effect of mutual fund investors

Lecturer: Xiaoxiao Wang (Post-Doc), School of Economics, Shandong University

Time: 12:15-13:15p.m. September 28th, 2023

Venue: B321 Zhixin Building, Central Campus

Abstract: This study examines whether the 2003 severe, acute respiratory syndrome (SARS) epidemic can increase the cognitive bias observed in the capital markets by investigating individual mutual fund investors’ trading behavior in the post-SARS era. We find that people in areas experiencing severe SARS epidemic exhibit stronger disposition effects after the end of the SARS epidemic, using a proprietary data set obtained from a large Chinese mutual fund family consisting of complete trading information. We further hypothesize that unsophisticated investors are more vulnerable to disposition effects. Additional findings show that this mood-regulation-induced behavior is irrational and related to behavioral biases, which ultimately makes investors worse off. Our results continue to hold across a wide range of robustness checks.