A central theme in accounting and economics research is how information environments shape economic decisions through spillovers that extend beyond the focal firm. We provide the first largescale causal evidence that such spillovers also arise among household investors, where peer-to-peer interactions constitute a previously underexplored channel of information acquisition. Exploiting Taiwan’s compulsory military draft, which randomly assigns 349,715 individuals to military units, we form peer groups exogenous to personal preferences, characteristics, and networks. We find that exposure to peers with higher stock market participation increases an individual’s own participation, with effects that persist long after service. Peer influence extends beyond entry: individuals disproportionately purchase peers’ stocks and earn higher post-service returns. These benefits are concentrated among those exposed to financially sophisticated peers, consistent with learning rather than imitation, and peer influence steers investors away from speculative lotterylike stocks. Notably, we find no comparable improvement in investment decisions among endogenously formed workplace peers, indicating that it is the composition of a peer group—not peer interaction per se—that determines whether social interactions enhance or degrade decision quality. Taken together, our findings identify peer networks as a novel spillover channel in the household information environment.
| Speaker: | Dr Kevin Tseng Professor of Accounting, Chinese University of Hong Kong |
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