Happiness and Stock-Market Participation: Empirical Evidence from China

Rao, Yulei; Mei, Lixing; Zhu, Rui

doi:10.1007/s10902-014-9594-4

Cited by 36 publications

(20 citation statements)

References 51 publications

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“…The tested model has adequate adjustment indexes, suggesting, on the one hand, that the scale is useful for predicting economic behaviors, and on the other hand, it highlights the direct influence of the emotional decisions of purchases with the monetary expenditure per week. A finding which is consistent with the evidence of the relationship between emotions decision-making (Loewenstein, 1996), behavior (Lerner & Keltner, 2000), and monetary spending (Babin & Darden, 1996;Cryder et al, 2008;Garg et al, 2018;Guven, 2012;Lerner et al, 2004;Rao, Mei & Zhu, 2016).…”

Section: Discussionsupporting

confidence: 86%

Development and validation of the Inventory of Emotional and Reasoned Purchases Decision-Making Styles (PDMI)

Soler-Anguiano

Aguayo

Palacios

et al. 2019

Sumapsi

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Consumer decision-making is part of the purchase process. Therefore, as a relevant element for the evaluation of the purchase process, it is essential to have valid, reliable and culturally relevant measurements. For that reason, in this study the development and validation of the Purchases Decision-Making Inventory (PDMI) are presented. The general sample consisted of 518 Mexican participants, which were randomly divided into two groups, 300 for exploratory analysis, and 218 for confirmatory analysis. The results show that PDMI evaluated from its general components of emotional and reasoned decisions in purchases, present high internal consistency. The confirmatory factor analysis shows a good fit to dimensions extracted from the exploratory analyses. In terms of convergent, divergent, and discriminant validity, relations according to the nomological network were found, and the factors showed independency. Finally, from the confirmed structures of the inventory, spending per week was modelled, finding that emotional decisions turned out to be a positive significant predictor. PDMI is an evaluation tool with cultural relevance and appropriate psychometric indexes that can be used to integrate into consumer behavior models.

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Section: Discussionsupporting

confidence: 86%

Development and validation of the Inventory of Emotional and Reasoned Purchases Decision-Making Styles (PDMI)

Soler-Anguiano

Aguayo

Palacios

et al. 2019

Sumapsi

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“…It is indicated that market returns of gold are driven by investor sentiment, and the effect is unidirectional rather than a feedback mechanism [97]. To sum up, the wax and wane of major financial markets can affect stock market investors' expectations and thus affect their investment behaviors [107]. From this perspective, we have reasonable evidence to support the idea that stock investor sentiment can be regarded as a systematic factor that influences the financial system [108].…”

Section: Empirical Analysismentioning

confidence: 60%

Can Stock Investor Sentiment Be Contagious in China?

Cai

Ran

2020

Sustainability

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This paper explores the impact of investor sentiment on financial markets in China by taking the quantile causality test. We find that government bond markets, gold markets, and foreign exchange markets are affected by stock investor sentiment, except for in the corporate bond market. In extreme situations, such as excessively optimistic or pessimistic sentiment, these markets will become more vulnerable to suffering from drastic fluctuations. On the contrary, the market return in government bonds, corporate bonds, and foreign exchange also has an influence on stock investor sentiment. Moreover, these links show various asymmetry due to the heterogeneity of different financial markets. Our results are consistent with the noise trader model, which shows the impact of investor sentiment on market returns. Hence, the authorities can sustain the stabilization of financial markets by reducing information asymmetry, guiding the rational sentiment of investors, and increasing effective regulations.Especially in certain extreme pessimistic situations, sentiment in the stock market can lead to drastic fluctuations in other financial markets [15,16], and the authorities cannot maintain market stability and continuity of development. In turn, the performance of these markets is also a remarkable barometer that leads stock investor sentiment to change [17]. Through information in different market environments, external shocks, not only make asset price fluctuate, but also result in stock investors overreacting, and this affects their investment expectations [18]. This bidirectional transmission is regarded as an important factor for the linkage among major financial markets [19]. Hence, investor sentiment plays an important role in the formation of financial market effectiveness. If investor sentiment cannot be reasonably guided, it will be difficult to suppress irrational trading and speculative bubbles and improve market efficiency.Compared with stock markets in developed countries, individual investors account for a large proportion of Chinese stock investors, which makes the whole market more emotional [20]. With a lack of social responsibility and an awareness of sustaining market efficiency, the individual Chinese investor has an underdeveloped investment education and, thus, they often show irrational investment behavior [21]. Hence, market fluctuation frequently happens, and it is difficult for investor sentiment to be properly guided. Not only do investors make irrational trades in the stock market, but they are also more likely to carry their emotions to other markets [22]. If investor sentiment in the stock market spreads to other markets and causes unexpected fluctuations in China, the pricing and operating efficiency of many financial markets will be damaged. As well as the stock market, the gold, bond, and foreign exchange markets are all financial markets with a large scale in China. If such emotional contagion exists in China, investors who excessively ignore the fundamentals will find it difficult to form th...

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“…Last but not least, complementary to a conceptual paper like this present one, empirical studies are of equal importance [56,57]. Thus, we encourage future research to design and implement an empirical model that validates the main propositions in this article.…”

Section: Conclusion and Future Researchmentioning

confidence: 67%

Social Capital and Stock Market Participation via Technologies: The Role of Households’ Risk Attitude and Cognitive Ability

et al. 2018

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This article reviews the relation between social capital and stock market participation via new technology. Its purpose is to acquire a thorough understanding of the structural, relational, and cognitive aspects of social capital's influences and to recommend further empirical research ideas to the existing body of knowledge on household finance. It discusses the consideration of modern and highly technological platforms such as the internet stock market exchange platforms and applications. The stock market participation puzzle remains unsolved despite the progress in explaining the economic rationality behind investors decision making through behavioral finance. Furthermore, the researchers develop four propositions which can expound the existing relationship between social capital dimensions such as the structural, relational, and cognitive aspects and stock market participation of households. Doing so, we discuss the roles of risk attitude and the influence of cognitive ability such as financial awareness, financial literacy, and IQ (intelligence quotient) to enhance the existing body of knowledge. Practically, this article adds valuable ideas in solving the issue of limited participation not just in the stock market but in other financial markets through reflecting on the sociological and (green) technological concepts. Lastly, the implications for sustainable financial markets are elaborated.

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Happiness and Stock-Market Participation: Empirical Evidence from China

Cited by 36 publications

References 51 publications

Development and validation of the Inventory of Emotional and Reasoned Purchases Decision-Making Styles (PDMI)

Development and validation of the Inventory of Emotional and Reasoned Purchases Decision-Making Styles (PDMI)

Can Stock Investor Sentiment Be Contagious in China?

Social Capital and Stock Market Participation via Technologies: The Role of Households’ Risk Attitude and Cognitive Ability

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