Behavior and performance of emerging market investors: Evidence from China

摘要

We study brokerage account data from China to study investing behavior and trading performance in an emerging market. We find that Chinese investors exhibit behavioral biases (i.e., they seem overconfident, inclined toward a disposition effect, and exhibit a representativeness bias) and make poor ex post trading decisions. We also consider potential cross-sectional determinants of investing behavior. Specifically, we identify (1) investors who have accumulated relatively more years of investing experience, (2) middle-aged investors, (3) active investors, (4) investors with relatively more wealth, and (5) investors from the more cosmopolitan Chinese cities, to see if these investors are less prone to exhibiting behavioral biases. Oftentimes, the answer seems to be ‘no.’