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Numerological superstitions and market-wide herding: Evidence from China

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  • Cui, Yueting
  • Gavriilidis, Konstantinos
  • Gebka, Bartosz
  • Kallinterakis, Vasileios

Abstract

We empirically investigate the effect of traditional Chinese numerological superstitions over market-wide herding in the Shanghai and Shenzhen stock exchanges for the 2000–2020 period, based on a classification of stocks as lucky/unlucky contingent on the presence of digits deemed numerologically lucky/unlucky in their tickers. We find no compelling evidence that herding is more pronounced in those superstitious stocks, as compared to the rest of the stock market. Both superstitious stock-types herd exclusively on high-volatility days and exhibit some pronounced patterns in up vs down markets; these effects are not significantly different from the behaviour of non-superstitious stocks, however. Similarly, herding in both superstitious stock-types is largely noise-driven, but the same effect is observed for non-superstitious stocks. The similarities in herding between superstitious and non-superstitious stocks suggest that numerological superstitions do not motivate significantly stronger herding in Chinese markets.

Suggested Citation

  • Cui, Yueting & Gavriilidis, Konstantinos & Gebka, Bartosz & Kallinterakis, Vasileios, 2024. "Numerological superstitions and market-wide herding: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 93(C).
    • Handle: RePEc:eee:finana:v:93:y:2024:i:c:s1057521924001315
    DOI: 10.1016/j.irfa.2024.103199
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    More about this item

    Keywords

    Superstition; Herding; Noise; Retail investors; China;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • Z10 - Other Special Topics - - Cultural Economics - - - General
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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