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A non-random walk down Hollywood Boulevard: celebrity deaths and investor sentiment

A non-random walk down Hollywood Boulevard: celebrity deaths and investor sentiment
A non-random walk down Hollywood Boulevard: celebrity deaths and investor sentiment
Motivated by psychological evidence that shows the public experiences emotional distress in response to the deaths of popular figures, I employ the deaths of 1,391 Hollywood Walk of Fame celebrities as natural experiments to identify exogenous public mood changes over the period 1926–2009. Consistent with the psychological theories which maintain that sadness encourages individuals to favor high‐risk/high‐reward investments, I find that U.S. stock returns are abnormally high immediately after the death of a major celebrity. This effect is particularly large during periods of high market‐level uncertainty (+0.40%) and for stocks headquartered in the city where the celebrity died (+0.26%).
celebrity deaths, investor sentiment, local trading bias, risk taking
0732-8516
1-23
Lepori, Gabriele
551865b7-2e3a-4de1-aaf9-6c7f23e32e8d
Lepori, Gabriele
551865b7-2e3a-4de1-aaf9-6c7f23e32e8d

Lepori, Gabriele (2020) A non-random walk down Hollywood Boulevard: celebrity deaths and investor sentiment. Financial Review, 0, 1-23. (doi:10.1111/fire.12254).

Record type: Article

Abstract

Motivated by psychological evidence that shows the public experiences emotional distress in response to the deaths of popular figures, I employ the deaths of 1,391 Hollywood Walk of Fame celebrities as natural experiments to identify exogenous public mood changes over the period 1926–2009. Consistent with the psychological theories which maintain that sadness encourages individuals to favor high‐risk/high‐reward investments, I find that U.S. stock returns are abnormally high immediately after the death of a major celebrity. This effect is particularly large during periods of high market‐level uncertainty (+0.40%) and for stocks headquartered in the city where the celebrity died (+0.26%).

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Accepted/In Press date: 21 September 2020
e-pub ahead of print date: 29 October 2020
Keywords: celebrity deaths, investor sentiment, local trading bias, risk taking

Identifiers

Local EPrints ID: 444112
URI: http://eprints.soton.ac.uk/id/eprint/444112
ISSN: 0732-8516
PURE UUID: 35c7d7a7-3757-4df1-88d8-0249b2e0b150
ORCID for Gabriele Lepori: ORCID iD orcid.org/0000-0002-2619-227X

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Date deposited: 25 Sep 2020 16:35
Last modified: 28 Apr 2022 06:33

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