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What Drives Individual Investors in the Bear Market?

Xu, R.; Liu, Y.; Hu, N.; Guo, M.


R. Xu

Y. Liu

N. Hu


This study uses a unique dataset from a large anonymous brokerage firm to examine the net investment of individual investors during a bear market. The study’s empirical evidence reveals that individual investors provide liquidity by acting as net buyers. Particularly, male and younger investors tend to have a higher buying intensity than the others during the market downturn. Besides, better performances when the market crashed encourage investors to be overconfident, thus exhibiting self-attribution bias since we do not find similar results in the bull-market subsample. Results from the stock-level analysis imply that investors tend to buy stocks with worse short-term past performance, higher liquidity, and larger market capitalization. Our findings on the individual investor trading behaviour cannot be explained by either a superior stock-picking ability or a higher tendency to gamble during the market downswing.

Journal Article Type Article
Acceptance Date Jun 15, 2022
Online Publication Date Jun 21, 2022
Publication Date 2022
Deposit Date Jun 26, 2022
Publicly Available Date Jun 22, 2024
Journal The British Accounting Review
Print ISSN 0890-8389
Publisher Elsevier
Peer Reviewed Peer Reviewed
Article Number 101113
Public URL


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