Business Commons^™

Essays On The Disposition Effect, Matthew Henriksson

USF Tampa Graduate Theses and Dissertations

This dissertation contains two essays that shed new light on the disposition effect – that is, the tendency for investors to be especially eager to realize gains over losses. The first essay combines county-level natural disaster data with individual investor transactions to document an increased disposition effect for investors impacted by a natural disaster. This effect is increasing in disaster severity and decreasing in the length of time following the event, suggesting that extreme natural disasters can significantly influence investor behavior, especially in the short term. These findings are not explained by liquidity needs, tax incentives, or informed trading. The …