Individuals’ Equity Investment and Birth Order

Ranadeb Chaudhuri, Zoran Ivkovich, and Andrei Simonov

♦ This paper studies the relation between individuals’ equity investment and birth order. Earlier-born siblings are more likely to participate in equity markets than later-born siblings are. Participating earlier-born siblings carry less portfolio risk and deliver stronger risk-adjusted portfolio performance than participating later-born siblings do. Baseline and moderation analyses suggest that the main mechanisms behind these patterns are strategic parenting and cultural expectations, and, to a lesser extent, adaptive divergence. By comparison, there is at best limited support for resource-dilution channels and virtually no evidence consistent with sibling confluence.

Read it here.