Participation Constraints in the Stock Market

OPEN ARCHIVE

Union Jack
Dannebrog

Participation Constraints in the Stock Market

Vis flere oplysninger

Titel: Participation Constraints in the Stock Market
Evidence from Unexpected Inheritance due to Sudden Death
Forfatter: Andersen, Steffen; Meisner Nielsen, Kasper
Resume: We use a natural experiment to investigate the impact of participation constraints on individuals' decisions to invest in the stock market. Unexpected inheritance due to sudden deaths results in exogenous variation in financial wealth and allows us to examine whether fixed entry and ongoing participation costs cause non-participation. We have three key findings. First, windfall wealth has a positive effect on participation. Second, the majority of households do not react to sizeable windfalls by entering the stock market, but hold on to substantial safe assets—even over longer horizons. Third, the majority of households inheriting stock holdings actively sell the entire portfolio. Overall, these findings suggest that participation by many individuals is unlikely to be constrained by financial participation costs.
URI: http://hdl.handle.net/10398/8169
Dato: 2010-09-22

Creative Commons License This work is licensed under a Creative Commons License.

Filer Størrelse Format Vis
wp3-2010.pdf 248.6Kb PDF Vis/Åbn Working paper

Dette dokument findes i følgende samling(er)

Vis flere oplysninger