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Peer effects at work: The common stock investments of co-workers


Östberg, Per Nils Anders; Hvide, Hans K (2012). Peer effects at work: The common stock investments of co-workers. Swiss Finance Institute Research Paper Series 12-34, University of Zurich.

Abstract

Stock market behavior of individual investors is highly correlated with stock market behavior of their co-workers. For example, a ten percentage point increase in the fraction of co-workers that purchase stocks in a given month is associated with a two percentage point increase in the likelihood of individuals making a purchase. The high correlation exists even after taking controlling for individual socio-demographic characteristics and for time, stock, zip code, and plant fixed effects. Using data on family relations and on residential zip code, we show that the high correlation is not driven by peer effects at the family or zip code level. Moreover, workplace peer effects appear to be strong relative to geographical peer effects.

Abstract

Stock market behavior of individual investors is highly correlated with stock market behavior of their co-workers. For example, a ten percentage point increase in the fraction of co-workers that purchase stocks in a given month is associated with a two percentage point increase in the likelihood of individuals making a purchase. The high correlation exists even after taking controlling for individual socio-demographic characteristics and for time, stock, zip code, and plant fixed effects. Using data on family relations and on residential zip code, we show that the high correlation is not driven by peer effects at the family or zip code level. Moreover, workplace peer effects appear to be strong relative to geographical peer effects.

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Additional indexing

Item Type:Working Paper
Communities & Collections:03 Faculty of Economics > Department of Banking and Finance
Dewey Decimal Classification:330 Economics
JEL Classification:G02, G11
Language:English
Date:2012
Deposited On:01 Feb 2013 07:48
Last Modified:21 Nov 2017 16:28
Series Name:Swiss Finance Institute Research Paper Series
Number of Pages:43
Publisher DOI:https://doi.org/10.2139/ssrn.2179095
Official URL:http://ssrn.com/abstract=2179095
Other Identification Number:merlin-id:7934

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