The long-lasting effects of propaganda on financial risk-taking

Laudenbach, Christine ; Malmendier, Ulrike ; Niessen-Ruenzi, Alexandra

Additional URL:
Document Type: Conference or workshop publication
Year of publication: 2019
Book title: American Finance Association 2019 Annual Meeting, Atlanta, Georgia : Summary of All Sessions
Page range: 1-65
Conference title: American Finance Association 2019 Annual Meeting
Location of the conference venue: Atlanta, GA
Date of the conference: 04.-06.01.2019
Publisher: Hirshleifer, David
Place of publication: Aldan, PA
Publishing house: American Finance Association
Publication language: English
Institution: Business School > ABWL u. Corporate Governance (Niessen-Ruenzi 2012-)
Subject: 330 Economics
Abstract: We analyze the long-term effects of living under communism and its political propaganda in East Germany (former GDR) for financial risk-taking. Utilizing comprehensive German brokerage data, we show that, decades after reunification, East Germans still invest significantly less in the stock market. Consistent with communist friends-and-foes propaganda, they are more likely to hold stocks of companies in communist countries (China, Russia, Vietnam), and are particularly unlikely to invest in American companies or the financial industry. Effects are stronger for individuals for whom we expect stronger emotional priming, for example those living in communist “showcase cities” or cities of Olympic gold medalists. In contrast, East Germans with negative experiences invest more in the stock market today, e.g., those experiencing environmental pollution and suppression of religious beliefs and those without access to (Western) TV entertainment. Election years appear to have trigger effects inducing East Germans to reduce their stock-market investment further. We also provide evidence of negative welfare consequences, as indicated by investment in more expensive actively managed funds, less diversified portfolios, and lower risk-adjusted returns.
Additional information: Online-Ressource

Dieser Eintrag ist Teil der Universitätsbibliographie.

Metadata export


+ Search Authors in

+ Page Views

Hits per month over past year

Detailed information

You have found an error? Please let us know about your desired correction here: E-Mail

Actions (login required)

Show item Show item