Superstition and Financial Decision Making
David Hirshleifer, Ming Jian, and Huai Zhang
Management Science, forthcoming.
In Chinese culture, certain digits are lucky and others unlucky. We test how such numerological superstition affects financial decision in the China IPO market. We find that the frequency of lucky numerical stock listing codes exceeds what would be expected by chance. Also consistent with superstition effects, newly listed firms with lucky listing codes are initially traded at a premium after controlling for known determinants of valuation multiples, the lucky number premium dissipates within three years after IPO, and lucky number firms experience inferior post-IPO abnormal returns.