Essays on Investor Behavior and Bank Culture

Research output: ThesisDoctoral ThesisCollection of Articles


This dissertation consists of an introduction and three original essays. In the first essay, I examine whether investors revise their beliefs about a stock's risk due to an increase in the stock's volatility. This revision makes loss-averse investors more willing to sell a riskier stock with a paper gain as the likelihood of having to sell it at a loss later increases. An analysis of a large dataset on the holdings and trades of individual investors yields empirical support for this prediction: a one standard deviation increase in volatility is associated with an 11% increase in the disposition effect. The effect primarily emerges from investors' increased propensity to sell stocks with small paper gains. In the second essay, I show investors exhibit a robust and systematic pattern of shortening their holding period in a stock on which they execute multiple round trip trades. On average, the holding period shortens by 11% with each additional round trip. I show this tendency to be short-termed is associated with reinforcement learning. Investors are more likely to shorten the holding period after a round trip where they could have realized a better return had they sold earlier. Investors become short-termed as they become more familiar with trading a stock. In the third essay, joint with Matti Keloharju and Deniz Okat, we analyze the effects of banks' "protected-weekend" policies, which aim at improving the work-life balance of junior bankers by guaranteeing them free time during weekends, in particular on Saturdays. We study how these policies affected bankers' working hours, as assessed from taxi rides from bank addresses and their immediate surroundings in New York City. While we find the policies induced bankers to stay at home on Saturdays, we also find they induced them to work more on other days. Our results suggest it is difficult to change bank culture by decree, and that well-meaning policies can have unintended consequences.
Translated title of the contributionEssays on Investor Behavior and Bank Culture
Original languageEnglish
QualificationDoctor's degree
Awarding Institution
  • Aalto University
  • Keloharju, Matti, Supervising Professor
Print ISBNs978-952-60-3844-5
Electronic ISBNs978-952-60-3845-2
Publication statusPublished - 2020
MoE publication typeG5 Doctoral dissertation (article)


  • investor behavior
  • trading biases
  • disposition effect
  • short-termism
  • bank culture
  • long-hour culture


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