Accounting & Finance Research Community Seminar – Professor Arman Eshraghi

Title: Investor Gambles and Political Signals

Date: 27 September 2024

Time: 14:30-15:30

Location: TBC

If you would like to attend, please register using the following link: Investor Gambles and Political Signals

Speaker: Professor Arman Eshraghi, Cardiff Business School.

Arman Eshraghi holds the Chair of Finance and Investment at Cardiff Business School. He is a Shimomura Fellow of the Development Bank of Japan, Fellow of the UK Higher Education Academy and the Centre for Study of Decision-Making Uncertainty at UCL. At Cardiff, Arman directs the Fintech Research Group, and serves as Deputy Head of Section for Research, Impact and Innovation. Arman’s academic research spans finance and accounting with broad interests including investment management, behavioural finance, financial technology, corporate governance, and critical accounting.

Abstract:

Examining two decades of market returns, we show investors ‘gamble’ more when the quality of political signals declines. As political information becomes more ambiguous, investors trade more lottery-type (low-priced, high-volatility, high-skewness) stocks in the hope of hitting the investment ‘jackpot’. In parallel, they trade fewer non-lottery-type stocks. This trading volume differential between top and bottom deciles of lottery-type investors is statistically and economically significant in number and dollar volume. Our findings are robust after controlling for economic policy uncertainty, VIX, and macroeconomic variables, and after including other measures of lottery stocks, political signal quality, and controls for federal lottery jackpots.