Do You Feel Lucky? Lottery Jackpot Winnings and Retail Trading around Neighborhoods

52 Pages Posted: 8 Jun 2021

See all articles by Dien Giau Bui

Dien Giau Bui

Yuan Ze University

Yu-Ju Chan

The University of Hong Kong

Chih-Yung Lin

National Yang Ming Chiao Tung University

Tse-Chun Lin

The University of Hong Kong - Faculty of Business and Economics

Date Written: June 5, 2021

Abstract

Using lottery jackpot winnings within neighborhoods as exogenous shocks, we examine whether feeling lucky affects retail stock purchases. We find that retail investors who trade through brokerage branches located close to stores that sell jackpot-winning tickets buy more stock shares than their counterparts. More importantly, these retail buys tend to lose money. We also find that these retail investors tend to purchase lottery-like stocks, linking the luck-driven trading motive to the traded targets under the common theme of gambling. We substantiate our results via several sets of falsification tests and robustness checks. Overall, feeling lucky induces retail investors to trade aggressively and leads to welfare losses.

Keywords: Lottery winnings, feeling lucky, trading turnover rate, investment performance, retail investors

JEL Classification: G11, G12, G41, G51

Suggested Citation

Bui, Dien Giau and Chan, Yu-Ju and Lin, Chih-Yung and Lin, Tse-Chun, Do You Feel Lucky? Lottery Jackpot Winnings and Retail Trading around Neighborhoods (June 5, 2021). Available at SSRN: https://ssrn.com/abstract=3860620 or http://dx.doi.org/10.2139/ssrn.3860620

Dien Giau Bui

Yuan Ze University ( email )

135, Far-East Rd., Chung-Li
Taoyuan, ROC
Taiwan

Yu-Ju Chan

The University of Hong Kong ( email )

Pokfulam Road
Hong Kong, Pokfulam HK
China

Chih-Yung Lin (Contact Author)

National Yang Ming Chiao Tung University ( email )

National chiao tung university, 1001 university ro
Hsinchu, 1001
Taiwan

Tse-Chun Lin

The University of Hong Kong - Faculty of Business and Economics ( email )

Pokfulam Road
Hong Kong
China

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