Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/228628 
Year of Publication: 
2021
Series/Report no.: 
CFR Working Paper No. 19-01
Version Description: 
January 2021
Publisher: 
University of Cologne, Centre for Financial Research (CFR), Cologne
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.
Subjects: 
Disposition effect
Family disruption
Feelings
Formative experience
Investor behavior
Risk-taking
Social finance
JEL: 
G11
G23
G41
Document Type: 
Working Paper

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