Hispanic Culture, Portfolio Decisions, and Asset Prices

89 Pages Posted: 16 Dec 2016 Last revised: 20 Aug 2020

See all articles by Jawad M. Addoum

Jawad M. Addoum

Cornell University

Carina Cuculiza

University of Miami - Department of Finance

Alok Kumar

University of Miami - Miami Herbert Business School

Stuart Webb

University of Miami

Date Written: August 19, 2020

Abstract

We examine the impact of culture on portfolio decisions and asset returns, focusing on the large and growing Hispanic population in the United States. We find that both retail and institutional investors in high Hispanic neighborhoods overweight local, lottery-type, and high-momentum stocks and their trades are more strongly correlated. Systematic Hispanic trading generates excess return comovement among locally headquartered firms. We also find evidence of higher local stock returns, a stronger negative lottery-stock premium, and larger momentum returns in high-Hispanic areas. Collectively, these findings suggest that evolving ethnic demographics affect U.S. capital markets.

Keywords: Hispanic culture, demographic shifts, local bias, lottery stocks, return comovement, local returns, return momentum

JEL Classification: G11, G12

Suggested Citation

Addoum, Jawad M. and Cuculiza, Carina and Kumar, Alok and Webb, Stuart, Hispanic Culture, Portfolio Decisions, and Asset Prices (August 19, 2020). Available at SSRN: https://ssrn.com/abstract=2885888 or http://dx.doi.org/10.2139/ssrn.2885888

Jawad M. Addoum

Cornell University ( email )

Ithaca, NY 14853
United States

Carina Cuculiza

University of Miami - Department of Finance ( email )

5250 University Drive
Coral Gables, FL 33146
United States

Alok Kumar

University of Miami - Miami Herbert Business School ( email )

514 Jenkins Building
Department of Finance
Coral Gables, FL 33124-6552
United States
305-284-1882 (Phone)

HOME PAGE: http://moya.bus.miami.edu/~akumar

Stuart Webb (Contact Author)

University of Miami ( email )

5250 University Dr.
514 Jenkins Building
Coral Gables, FL 33146
United States

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