DP9837 Stock investments at work

Author(s):	Hans K Hvide, Per Östberg
Publication Date:	February 2014
Keyword(s):	Individual investors, investment decisions, peer effect, social interaction, stock selection
JEL(s):	G02, G11, J00
Programme Areas:	Labour Economics, Public Economics, Financial Economics
Link to this Page:	cepr.org/active/publications/discussion_papers/dp.php?dpno=9837

Stock market investment decisions of individuals are positively correlated with that of co-workers. Sorting of unobservably similar individuals to the same workplaces is unlikely to explain our results, as evidenced by the investment behavior of individuals that move between plants. Purchases made under stronger co-worker purchase activity are not associated with higher returns. Moreover, social interaction appears to drive the purchase of within-industry stocks; an investment mistake. Overall, our results suggest a strong influence of co-workers on investment choices, but not an influence that improves the quality of investment decisions.