How Are Investor Trading Activity and Performance Affected by Major Lifecycle Events? The Case of Divorce

47 Pages Posted: 4 Jun 2014 Last revised: 3 Feb 2017

See all articles by Andrew R. Grant

Andrew R. Grant

University of Sydney - Discipline of Finance, Faculty of Economics and Business; Financial Research Network (FIRN)

Petko S. Kalev

La Trobe Business School

Avanidhar Subrahmanyam

University of California, Los Angeles (UCLA) - Finance Area; Institute of Global Finance, UNSW Business School; Financial Research Network (FIRN)

P. Joakim Westerholm

University of Sydney Business School; Financial Research Network (FIRN)

Date Written: February 1, 2017

Abstract

How are financial market participation and trading impacted by material events during individuals’ lifetimes? We shed light on this question by analyzing the trading performance and decisions of individual investors who experience divorce. We utilize transaction-level stock price data from Finland that allow us to identify divorced individuals using court-ordered transfers of shares over a 17-year period. Divorcees earn returns that are approximately 16% p.a. lower than those of a control sample of closely matched peers. The lower returns of divorced individuals are most pronounced among investors holding small portfolios and investors who do not buy and sell actively around the divorce settlement. We argue that the results are driven by a combination of distraction and unexpected liquidity needs.

Keywords: divorce, stressors, individual investor performance

JEL Classification: G11, G12, G30

Suggested Citation

Grant, Andrew R. and Kalev, Petko S. and Subrahmanyam, Avanidhar and Westerholm, P. Joakim, How Are Investor Trading Activity and Performance Affected by Major Lifecycle Events? The Case of Divorce (February 1, 2017). FIRN Research Paper. Available at SSRN: https://ssrn.com/abstract=2445073 or http://dx.doi.org/10.2139/ssrn.2445073

Andrew R. Grant

University of Sydney - Discipline of Finance, Faculty of Economics and Business ( email )

P.O. Box H58
Sydney, NSW 2006
Australia
61-2-9036-7991 (Phone)

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Petko S. Kalev

La Trobe Business School ( email )

Department of Economics and Finance
Donald Whitehead Building: Level 3, DWB313
Bundoora, Victoria 3086
Australia
+613 9479 6285 (Phone)
+613 9479 1654 (Fax)

HOME PAGE: http://www.latrobe.edu.au/business/about/staff/profile?uname=PKalev

Avanidhar Subrahmanyam

University of California, Los Angeles (UCLA) - Finance Area ( email )

Los Angeles, CA 90095-1481
United States
310-825-5355 (Phone)
310-206-5455 (Fax)

Institute of Global Finance, UNSW Business School

Sydney, NSW 2052
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

P. Joakim Westerholm (Contact Author)

University of Sydney Business School ( email )

Cnr. of Codrington and Rose Streets
Sydney, NSW 2006
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Register to save articles to
your library

Register

Paper statistics

Downloads
133
Abstract Views
1,030
rank
217,226
PlumX Metrics