THREE ESSAYS IN BEHAVIORAL FINANCE: THE INFLUENCE OF INTELLIGENCE, GENDER, AND SENTIMENT

Yunjin Sun, University of New Hampshire, Durham

Abstract

This dissertation studies the influence of factors such as intelligence, gender, and investor sentiment on individual and institution's economic and financial decisions and subsequent outcomes. The first chapter innovatively utilizes stock market simulation data to evaluate the role of intelligence in individual investor trading behavior and performance. The findings indicate that intelligence plays a significant role in accounting for heterogeneity in various trading behaviors. However, a direct relationship between intelligence and investor performance is not found.

The second chapter evaluates the role of gender in course performance, internship experience, and first full-time job of a group of college finance students. This chapter is the first investigating the role of gender in an upper-level finance course and the first collecting employment data from a professional social network - LinkedIn, which provides information on students' internship experience and job relevance. A significant gender difference is not identified in the course performance of the upper-level finance course. However, female students are found less likely to take an internship related with finance or an internship related with the first full-time job. Even with finance internship experience, female students are less likely to have the first full-time job related with finance.

The third chapter focuses on "investor sentiment" which has been reported and monitored by the financial media since a long time ago. This chapter originally studies the driving forces of investor sentiment with a focus on the influences of a series of rational factors. In addition, it contributes to the group of studies on the predictability of investor sentiment by investigating both sentiment levels and extremes. The results of this chapter highlight the differences between individual and institutional investors. It is found that institutional investors place a greater weight on fundamental analysis while few economic fundamentals exert an impact on individual investors. In addition, while on average the level of institutional investor sentiment has a negative and significant impact on future stock returns, the impact of individual investor sentiment level is negligible. However, individual investor sentiment becomes a notable contrarian indicator once it reaches some extremely low values.