Information Sharing and Stock Market Participation: Evidence from Extended Families
Federal Reserve Board
September 1, 2009
Using the Panel Study of Income Dynamics, we document that, controlling for observable characteristics, household investors' likelihood of entering the stock market within the next five years is about 30 percent higher if their parents or children had entered the stock market during the previous five years. By eliminating competing hypotheses such as preference similarity and herding, we argue that these findings highlight the significance of information sharing regarding household financial decisions.
Number of Pages in PDF File: 27
Keywords: Information sharing, Stock market participation, Extended families
JEL Classification: D14, D83, G11
Date posted: March 15, 2010