Volume 29, Issue 1
DOI: 10.24205/03276716.2020.37
FINANCIAL PSYCHOLOGY ANALYSIS OF NUMERICAL SUPERSTITIONS AND STOCK PRICE VOLATILITY: EMPIRICAL EVIDENCES FROM CHINA’S A-SHARE MARKET
Abstract
Many Chinese have numerical superstitions, such as the aversion to the number 4 and affinity for the numbers 8 and 6. This paper investigates whether numerical superstitions affect the stock price volatility of China’sA-sharemarket. Based on the monthly data of the A-sharemarketfromSeptember 2014 to December 2017, the authors analyzed the relationship between stock price volatility and the code effect of numerical superstitionsfromthe perspective of financial psychology. The results show that, the stock price volatility was greatly affected by the code effectduringthebullmarketintheearlydaysoftheA-sharemarket, but this effect has gradually disappeared. In the Small and Medium Enterprise (SME) Board and the Growth Enterprise Market(GEM)Board, the lucky code affects stock price volatility in a bull market or slow bull market, while the unluck code only affect stock price volatility only in a bear market. This research provides new empirical evidence on the relationship between numerical superstitions and stock price volatility.
Keywords
Numerical Superstitions, Stock Code, Financial Psychology, Stock Price Volatility.