Theoretical models predict that overcon�dent investors trade excessively. We test this prediction by partitioning investors on gender. Psychological research demonstrates that, in areas such as �nance, men are more overcon�dent than women. Thus, theory predicts that men will trade more excessively than women. Using account data for over 35,000 households from a large discount brokerage, we analyze the common stock investments of men and women from February 1991 through January 1997. We document that men trade 45 percent more than women. Trading reduces men’s net returns by 2.65 percentage points a year as opposed to 1.72 percentage points for women. It’s not what a man don’t know that makes him a fool, but what he does know that ain’t so. Josh Billings, nineteenth century American humorist It is dif�cult to reconcile the volume of trading observed in equity markets with the trading needs of rational investors. Rational investors make periodic contributions and withdrawals

The authors thank State Street Global Advisors for providing the 401(k) plan data and Stefan Bokor for his great help in organizing the data. The authors also thank Jim Gilkeson, Alicia Munnell, Brian Surette, and seminar participants at the 2000 FMA in Seattle for useful comments. Especially userful were the comments from an anonymous referee and Ed Kane. The research reported herein was performed pursuant to a grant from the U.S. Social Security Administration (SSA) funded as part of the Retirement Research Consortium. The opinions and conclusions are solely those of the author(s) and should not be construed as

views expressed in this paper are those of the authors, and not necessarily those of the Federal Reserve Board or its staff. 1

Theoretical models predict that overconfident investors trade excessively. We test this prediction by partitioning investors on gender. Psychological research demonstrates that, in areas such as finance, men are more overconfident than women. Thus, theory predicts that men will trade more excessively than women. Using account data for over 35,000 households from a large discount brokerage, we analyze the common stock investments of men and women from February 1991 through January 1997. We document that men trade 45 percent more than women. Trading reduces men’s net returns by 2.65 percentage points a year as opposed to 1.72 percentage points for women. It's not what a man don't know that makes him a fool, but what he does know that ain't so. Josh Billings, 19 th century American humorist It is difficult to reconcile the volume of trading observed in equity markets with the trading needs of rational investors. Rational investors make periodic contributions and withdrawals from their investment portfolios, rebalance their portfolios, and trade to minimize their taxes. Those possessed of superior information may trade speculatively,

Document complet disponible sur OLIS dans son format d'origine Complete document available on OLIS in its original formatDELSA/ELSA/WD/SEM(2003)11

This study develops three heuristics to measure financial optimism: financial expectation, a priori optimism, and a posteriori optimism. This paper finds that financial optimism has a significant positive effect on risk taking behaviour. Optimistic investors choose risky portfolios over risk-free portfolios for their investments and have higher personal debt borrowing. We use more than six million observations from the British Household Panel Survey covering the period 1991 to 2007 in our analysis. Optimistic, pessimistic and neural respondents have significantly different demographic characteristics. Optimists are significantly younger, more likely being male, have higher educational qualifications, more likely to have business ownership, borrow more personal debt and take on a larger mortgage than pessimists. However they also have a lower accumulated financial wealth and higher average unemployment rate than people who are pessimistic or neutral towards their financial situation. 2

In this paper, we study the relation between CFO gender and earnings management in China. Using a large sample of publicly traded firms from 1999-2006, we find evidence that male CFOs engage in more earnings management than female CFOs. Specifically, our cross-sectional analysis shows that female CFO firm-years have significantly lower discretionary current accruals, lower abnormal production costs, and higher abnormal discretionary expenses than male CFO firm-years. Overproduction in male CFO firmyears is more pronounced among manufacturing firms. We further study a subsample of CFO turnovers and find that male new CFOs are more aggressive than female new CFOs in managing down earnings during their first year as CFO. One possible explanation is that male new CFOs intentionally manage down earnings in the first year in order to take bigger credit for any subsequent performance improvement. Overall, our evidence supports the hypothesis that female CFOs are more risk averse in making financial reporting and operational decisions than male CFOs are.