Hispanic Culture, Portfolio Decisions, and Asset Prices

100 Pages Posted: 16 Dec 2016 Last revised: 13 Jun 2022

See all articles by Jawad M. Addoum

Jawad M. Addoum

Cornell SC Johnson College of Business

Carina Cuculiza

Marquette University

Alok Kumar

University of Miami - Miami Herbert Business School

Stuart Webb

University of Miami

Date Written: February 2, 2022

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. Their systematic trades in these stocks generates excess return comovement that is unrelated to firm fundamentals. We also find evidence of higher local stock returns, a stronger negative lottery-stock premium, and larger momentum returns among firms headquartered in high-Hispanic areas. Collectively, these findings suggest that evolving ethnic demographics affect U.S. capital markets.

Keywords: Hispanic culture, 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 (February 2, 2022). Available at SSRN: https://ssrn.com/abstract=2885888 or http://dx.doi.org/10.2139/ssrn.2885888

Jawad M. Addoum

Cornell SC Johnson College of Business ( email )

Ithaca, NY 14850
United States

Carina Cuculiza

Marquette University ( email )

P.O. Box 1881
Milwaukee, WI 53201-1881
United States

Alok Kumar

University of Miami - Miami Herbert Business School ( email )

512B 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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