The Influence of Culture on the Disposition Effect. Individual assignment

Kishta, Mohammed (2013) The Influence of Culture on the Disposition Effect. Individual assignment. [Dissertation (University of Nottingham only)] (Unpublished)

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Abstract

This

  paper

  is

  intended

  to

  examine,

  compare,

  and

  justify

  the

  degree

  of

  disposition

  effect

  present

  in

  individuals

  of

  three

  different

  cultures,

  Chinese,

  Indian

  and

  Arab.

  ␣␣␣␣ ␣␣␣␣␣␣␣␣ ␣␣␣␣␣ ␣␣␣␣␣␣␣␣␣␣ ␣␣␣ ␣␣␣ ␣␣␣␣␣␣␣␣␣␣␣␣ ␣␣␣␣␣␣␣␣ ␣␣␣␣␣␣␣␣ has

  a

  significant

  influence

 on

 the

 degree

 of

 disposition

 effect,

 that

 is,

 the

 fact

 that

 investors

 seem

  to

 hold

 on

 to

 their

 losing

 stocks

 to

 a

 greater

 extent

 than

 they

 hold

 their

 winning

  stocks.

  We

  examine

  the

  effect

  of

  culture

  on

  this

  behavioural

  phenomena

  using

  a

  devised

 excel

 program

 game

 that

 replicates

 a

 real

 stock

 market

 environment.

 As

  a

  control

  procedure,

  we

  made

  sure

  that

  all

  participants

  in

  our

  experiment

  had

  a

  background

  in

  finance

  and

  share

  the

  same

  demographics

  in

  terms

  of

  age,

  experience,

 and

 occupation

 (University

 students).

 

 Our

 experiment

 was

 designed

  to

  capture

  the

  degree

  of

  disposition

  effect

  exhibited

  using

  a

  measure

  that

  compares

  net

  realized

  gains

  to

  net

  realized

  losses

  for

  each

  participating

  subject.

  This

  is

  the

  same

  measure

  used

  by

  Weber

  and

  Camerer

  in

  their

  study

  of

  disposition

 effect

 in

 1997.

 Using

 subjects

 from

 China,

 India,

 and

 Palestine

 in

 our

  experiment,

 we

 found

 that

 the

 disposition

 effect

 exists

 and

 is

 similar

 between

 all

  three

  cultures.

  After

  analysing

  our

  results

  further

  using

  Stata

  software,

  a

  statistical

  tool,

  we

  again

  found

  that

  culture

  does

  not

  have

  a

  significant

  effect

  on

  the

  disposition

  effect.

  However,

  we

  discovered

  that

  Chinese

  and

  Indian

  cultures

  vary

 the

 most

 in

 term

 of

 the

 disposition

 effect

 they

 exhibit.

 

 Yet,

 this

 observation

  is

  not

  significant

  given

  the

  fact

  that

  the

  variance

  is

  not

  large

  enough

  for

  us

  to

  conclude

 that

 culture

 has

 a

 substantial

 impact

 the

 on

 the

 disposition

 effect.

Item Type: Dissertation (University of Nottingham only)
Depositing User: EP, Services
Date Deposited: 17 Dec 2021 13:59
Last Modified: 17 Dec 2021 13:59
URI: http://eprints.nottingham.ac.uk/id/eprint/26517

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