IDEAS home Printed from https://ideas.repec.org/a/taf/nzecpp/v58y2024i1p74-86.html
   My bibliography  Save this article

Differences between NZ and U.S. individual investor sentiment: more noise or more information?

Author

Listed:
  • Jędrzej Białkowski
  • Moritz Wagner
  • Xiaopeng Wei

Abstract

In this study, we introduce a newly created sentiment index of individual investors in NZ constructed similar to the well-known sentiment index provided by the American Association of Individual Investors (AAII) in the U.S. This unique setup allows us to compare different aspects of investors’ behaviour in both countries. We show that NZ market participants are less confident about the directional movement of the stock market, their expectations are more volatile and their distributions have fatter tails. By contrast, both bullish and bearish sentiment is more persistent among U.S. investors. Furthermore, our analysis of return predictability reveals that both groups of investors behave as noise traders. However, the results for NZ investors are stronger. Overall, our findings call for better financial education, particularly in the area of equity investing.

Suggested Citation

  • Jędrzej Białkowski & Moritz Wagner & Xiaopeng Wei, 2024. "Differences between NZ and U.S. individual investor sentiment: more noise or more information?," New Zealand Economic Papers, Taylor & Francis Journals, vol. 58(1), pages 74-86, January.
    • Handle: RePEc:taf:nzecpp:v:58:y:2024:i:1:p:74-86
    DOI: 10.1080/00779954.2023.2235751
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/00779954.2023.2235751
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/00779954.2023.2235751?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:nzecpp:v:58:y:2024:i:1:p:74-86. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: http://www.tandfonline.com/RNZP20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.