Stock Market Ownership Transitions

60 Pages Posted: 24 May 2017 Last revised: 26 Jan 2024

See all articles by Yosef Bonaparte

Yosef Bonaparte

University of Colorado at Denver - Department of Finance

George M. Korniotis

University of Miami - Department of Finance

Alok Kumar

University of Miami - Miami Herbert Business School

Alexander Michaelides

Imperial College Business School; Centre for Economic Policy Research (CEPR)

Yuxin Zhang

Renmin University of China

Multiple version iconThere are 2 versions of this paper

Date Written: January 25, 2024

Abstract

A significant portion of U.S. households enters and exits investment accounts. Empirically, income and wealth changes are related to these transitions, with income changes not affecting the retired. We find that a life-cycle model with participation costs cannot match the observed ownership dynamics. An extension with a stock-market crash fits better the average participation rate and the ownership transitions of the middle-aged and retired, but not the ownership dynamics of the young, which is better captured by a model with elevated income risk. Overall, across the life-cycle, ownership transitions respond to wealth shocks in both model and data.

Keywords: Stock market transitions, trading costs, life-cycle portfolio decisions, rare disaster, income and wealth shocks

JEL Classification: D14, G11, G12

Suggested Citation

Bonaparte, Yosef and Korniotis, George M. and Kumar, Alok and Michaelides, Alexander and Zhang, Yuxin, Stock Market Ownership Transitions (January 25, 2024). Available at SSRN: https://ssrn.com/abstract=2972173 or http://dx.doi.org/10.2139/ssrn.2972173

Yosef Bonaparte

University of Colorado at Denver - Department of Finance ( email )

United States

George M. Korniotis (Contact Author)

University of Miami - Department of Finance ( email )

P.O. Box 248094
Coral Gables, FL 33124-6552
United States
305-284-5728 (Phone)

Alok Kumar

University of Miami - Miami Herbert Business School ( email )

517B Jenkins Building
Department of Finance
Coral Gables, FL 33124-6552
United States
305-284-1882 (Phone)

HOME PAGE: http://sites.google.com/view/alokmiami/home

Alexander Michaelides

Imperial College Business School ( email )

South Kensington Campus
Exhibition Road
London SW7 2AZ, SW7 2AZ
United Kingdom

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Yuxin Zhang

Renmin University of China ( email )

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