Transient Emotions, Perceptions of Well-being, and Mutual Fund Flows

19 Pages Posted: 31 Dec 2020 Last revised: 16 Jun 2021

See all articles by William Bazley

William Bazley

University of Kansas

Arash Dayani

Clemson University, Department of Finance

Sima Jannati

University of Missouri-Columbia

Date Written: October 29, 2020

Abstract

Investors' sentiment is typically proxied by aggregate measures. However, it is composed of distinguishable elements, including impermanent emotions and subjective appraisals of well-being. We show that experiencing transient happiness is associated with flows to mutual funds in the following month. When considering funds' investment style, heterogeneous effects arise. Happiness and perceived well-being correspond with flows to growth funds but not value funds. Ultimately, broad measures of sentiment may conceal nuances of investor behavior, which can potentially affect asset prices through investment style preferences.

Keywords: Investor behavior, portfolio choice, sentiment.

JEL Classification: G10, G23, G41.

Suggested Citation

Bazley, William and Dayani, Arash and Jannati, Sima, Transient Emotions, Perceptions of Well-being, and Mutual Fund Flows (October 29, 2020). Finance Research Letters, 41, 2021, Available at SSRN: https://ssrn.com/abstract=3721454

William Bazley

University of Kansas ( email )

3143 Capitol Federal Hall
1654 Naismith Drive
Lawrence, KS 66045
United States

Arash Dayani

Clemson University, Department of Finance ( email )

Clemson, SC 29634
United States

HOME PAGE: http://www.arashdayani.com

Sima Jannati (Contact Author)

University of Missouri-Columbia ( email )

511 Cornell Hall
COLUMBIA, MO 65211
United States

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