Hispanic Culture, Stock Preferences, and Asset Prices

77 Pages Posted: 16 Dec 2016 Last revised: 21 Jan 2019

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 - School of Business Administration

Stuart Webb

University of Miami

Date Written: January 17, 2019

Abstract

We examine the effect of Hispanic culture on portfolio choice and asset returns in the United States. Using the minimum distance from the Canadian border as an instrument for an area's Hispanic concentration, we show that Hispanic investors are more likely to invest in local, lottery-type, and high-momentum stocks than the average U.S. investor. Their trades in these stocks are correlated and generate return comovement that cannot be explained by fundamentals. Additionally, Hispanics' return chasing behavior leads to pronounced momentum returns among firms headquartered in high-Hispanic areas. Overall, these findings suggest that evolving demographics are important for capital markets.

Keywords: culture, style investing, local bias, lottery stocks, comovement, momentum

JEL Classification: G11, G12

Suggested Citation

Addoum, Jawad M. and Cuculiza, Carina and Kumar, Alok and Webb, Stuart, Hispanic Culture, Stock Preferences, and Asset Prices (January 17, 2019). 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 )

P.O. Box 248094
Coral Gables, FL 33124-6552
United States

Alok Kumar

University of Miami - School of Business Administration ( 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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