Education and stock market performance

  • Kristjan Liivamägi

Abstract

In our recent work (Liivamägi, Vaarmets, & Talpsepp, 2014), we study how education and mental abilities affect investors’ risk adjusted performance on the stock market. We use a dataset from Tallinn stock exchange, covering stock market transactions from a full business cycle along with educational background details for all individual investors. Data are anonymous and provided by official national registries. Controlling for a variety of tradingrelated and socio-economic factors, we show that better mathematical skills and overall high mental abilities are associated with better risk adjusted performance. In addition, holding a higher degree or a university degree in economics or information technology helps to outperform other investors.

 

Abstract in Estonian:

Seosed hariduse ja investorite edukuse vahel

Kristjan Liivamägi

Analüüsides oma uurimistöös (Liivamägi, Vaarmets, & Talpsepp, 2014) hariduslike faktorite mõju investorite riskiga korrigeeritud tootlustele, suudame tuvastada need investorid, keda börsil tegutsedes saadab suurem edu. Investorite finantskäitumise analüüsimiseks kasutame andmekogumit, mis hõlmab nii anonüümseid Tallinna Börsi investorite tehinguid kui ka nende investoritega seotud hariduslikke andmeid. Oma uurimistöös jõudsime järeldusele, et paremaid tulemusi matemaatikas ning üldiselt kõrgemaid vaimseid võimeid näitavad investorid suudavad aktsiaturul oma varasid edukamalt kasvatada kui teised inimesed. Lisaks sellele selgub meie valimi põhjal, et kõrgemalt haritud ning ülikoolis majanduse või infotehnoloogia alal kraadi omavad investorid näitavad aktsiaturul kõrgemat riskiga korrigeeritud tootlust.

 

Artikkel on PDF versioonis eesti keeles: vaatamiseks vali link Full Text: PDF

References

Christiansen, Charlotte, Juanna Schröter Joensen, and Jesper Rangvid. "Are economists more likely to hold stocks?." Review of Finance 12.3 (2008): 465-496.

Dhar, Ravi, and Ning Zhu. "Up close and personal: Investor sophistication and the disposition effect." Management Science 52.5 (2006): 726-740.

Grinblatt, Mark, and Matti Keloharju. "The investment behavior and performance of various investor types: a study of Finland's unique data set."Journal of Financial Economics 55.1 (2000): 43-67.

Grinblatt, Mark, Matti Keloharju, and Juhani T. Linnainmaa. "IQ, trading behavior, and performance." Journal of Financial Economics 104.2 (2012): 339-362.

Hong, Harrison, Jeffrey D. Kubik, and Jeremy C. Stein. "Social interaction and stock‐market participation." The journal of finance 59.1 (2004): 137-163.

Ivković, Zoran, Clemens Sialm, and Scott Weisbenner. "Portfolio concentration and the performance of individual investors." Journal of Financial and Quantitative Analysis 43.03 (2008): 613-655.

Kumar, Alok. "Who gambles in the stock market?." The Journal of Finance64.4 (2009): 1889-1933.

Liivamägi, Kristjan, Tarvo Vaarmets, and Tõnn Talpsepp. "Masters of the Stock Market." TUT Economic Research Series 7 (2014).

Nguyen, Tristan, and Alexander Schuessler. "Investment Decisions and Socio-demographic Characteristics–Empirical Evidence from Germany." International Journal of Economics and Finance 4.9 (2012): p1.

Talpsepp, Tõnn. "Reverse disposition effect of foreign investors." Journal of Behavioral Finance 12.4 (2011): 183-200.

Vaarmets, Tarvo, Kristjan Liivamägi, and Tõnn Talpsepp. "The brilliant mind of investors." TUT Economic Research Series 6 (2014).
Published
2014-10-01
Section
Research Briefs