On the origins of risk-taking in financial markets

Sandra E. Black, Paul J. Devereux, Petter Lundborg, Kaveh Majlesi

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32 Citations (Scopus)


Financial investment behavior is highly correlated between parents and their children. Using Swedish data, we find that the decision of adoptees to hold equities is associated with the behavior of both biological and adoptive parents, implying a role for both genetic and environmental influences. However, we find that nurture has a stronger influence on the share of financial assets invested in equities and on portfolio volatility, suggesting that financial risk-taking is substantially environmentally determined. The parental investment variables substantially increase the explanatory power of cross-sectional regressions and so may play an important role in understanding cross-sectional heterogeneity in investment behavior.

Original languageEnglish
Pages (from-to)2229-2278
Number of pages50
JournalJournal of Finance
Issue number5
Publication statusPublished - Oct 2017
Externally publishedYes

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