On the Behavioral Differences between Professional and Amateur Investors after the Weekend

14 Pages Posted: 14 Mar 2009

See all articles by Itzhak Venezia

Itzhak Venezia

Hebrew University of Jerusalem - Jerusalem School of Business Administration

Zur Shapira

Leonard N. Stern School of Business - Department of Economics; New York University (NYU) - Department of Management and Organizational Behavior

Date Written: May 30, 2006

Abstract

This paper compares the trading patterns of amateur and professional investors during the days following the weekend. The comparison is based on all the daily transactions of a sample of both amateurs and professionally managed investors in a major brokerage house in Israel from 1994 to1998. We find that weekends influence both amateurs and professional investors; however they affect them in opposite directions. Individuals increase both their buy and sell activities, and their propensity to sell rises more than their propensity to buy. Professionals on the other hand tend to perform fewer buy as well as sell trades after the weekend, but unlike individuals, the drop in their activity is almost the same for buy trades and for sell trades.

The results agree with previous hypotheses raised in the literature, but not directly tested, about the effects of the weekend on the predisposition to trade of individuals and institutions in other markets. We also find that returns on the Israeli Stock Market Index are correlated in general with the behavioral patterns exhibited by the investors in our sample. In particular the returns on the days following the weekend are lower than those in other weekdays in a manner consistent with the behavioral patterns we found.

Keywords: Weekend effect, Professional and individual investors' behavior, Behavioral finance

JEL Classification: G10, G11, G14

Suggested Citation

Venezia, Itzhak and Shapira, Zur, On the Behavioral Differences between Professional and Amateur Investors after the Weekend (May 30, 2006). Journal of Banking and Finance, Vol. 31, 2007, Available at SSRN: https://ssrn.com/abstract=1359431

Itzhak Venezia (Contact Author)

Hebrew University of Jerusalem - Jerusalem School of Business Administration ( email )

Mount Scopus
Jerusalem, 91905
Israel

Zur Shapira

Leonard N. Stern School of Business - Department of Economics ( email )

40 West Fourth Street, 7-06
New York, NY 10012
United States

New York University (NYU) - Department of Management and Organizational Behavior ( email )

44 West 4th Street
New York, NY 10012
United States

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