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Culture and Stock Price Clustering: Evidence from The Peoples' Republic of China

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dc.contributor.authorBrown, Philip
dc.contributor.authorMitchell, Jason
dc.date.accessioned2012-03-30T07:32:57Z
dc.date.available2012-03-30T07:32:57Z
dc.date.issued2008
dc.description.abstractPrice clustering is the tendency of prices to be observed more frequently at some numbers than others. It results from human bias and from haziness or imprecise beliefs about underlying value. To many Chinese, the number 8 is attractive because it is considered "lucky", while 4 is "unlucky" and to be avoided. We conduct a tightly controlled experiment to determine whether a culturally heuristic number preference exists, by studying trading on the Shanghai and Shenzhen stock exchanges, which historically have been relatively segmented along cultural lines. Our results are extremely clear. For much of our sample period (1994-2002), the prices of A-shares (mostly held by Chinese organisations or individuals) traded on the Shanghai stock exchange were more than twice as likely to end in 8, than 4. Similarly, for A-shares traded on the Shenzhen stock exchange a preference for 8 was found. Preference for 8 on both exchanges was initially very strong, but has weakened somewhat over time. It is observed in opening, high and low as well as closing prices, reinforcing its pervasiveness. Overall, the cultural preference manifest in the prices of A-shares is widespread in both markets and its presence is accentuated once other factors that influence price clustering are taken into account. The preference for 8 was much weaker for B-shares, which largely have been held by foreigners.en
dc.identifier.citationPacific-Basin Finance Journal
dc.identifier.issn0927538X
dc.identifier.urihttps://hdl.handle.net/10986/5463
dc.language.isoEN
dc.relation.urihttp://creativecommons.org/licenses/by-nc-nd/3.0/igo
dc.rights.holderWorld Bank
dc.subjectPortfolio Choice
dc.subjectInvestment Decisions G110
dc.subjectAsset Pricing
dc.subjectTrading volume
dc.subjectBond Interest Rates G120
dc.subjectEconomic Development: Financial Markets
dc.subjectSaving and Capital Investment
dc.subjectCorporate Finance and Governance O160
dc.subjectSocialist Institutions and Their Transitions: Financial Economics P340
dc.titleCulture and Stock Price Clustering: Evidence from The Peoples' Republic of Chinaen
dc.title.alternativePacific-Basin Finance Journalen
dc.typeJournal Articleen
dc.typeArticle de journalfr
dc.typeArtículo de revistaes
dspace.entity.typePublication
okr.doctypeJournal Article
okr.externalcontentExternal Content
okr.identifier.externaldocumentum305
okr.journal.nbpages95-120
okr.language.supporteden
okr.peerreviewAcademic Peer Review
okr.region.countryChina
okr.relation.associatedurlhttp://dx.doi.org/10.1016/j.pacfin.2007.04.005
okr.relation.associatedurlhttp://search.ebscohost.com/login.aspx?direct=true&db=eoh&AN=0964251&site=ehost-live
okr.relation.associatedurlhttp://www.elsevier.com/wps/find/journaldescription.cws_home/523619/description#description
okr.volume16
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