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Medientyp:
E-Artikel
Titel:
Excessive Extrapolation and the Allocation of 401(k) Accounts to Company Stock
Beteiligte:
Benartzi, Shlomo
Erschienen:
Wiley, 2001
Erschienen in:The Journal of Finance
Sprache:
Englisch
DOI:
10.1111/0022-1082.00388
ISSN:
0022-1082;
1540-6261
Entstehung:
Anmerkungen:
Beschreibung:
<jats:title>ABSTRACT</jats:title><jats:p>About a third of the assets in large retirement savings plans are invested in company stock, and about a quarter of the <jats:italic>discretionary</jats:italic> contributions are invested in company stock. From a diversification perspective, this is a dubious strategy. This paper explores the role of excessive extrapolation in employees' company stock holdings. I find that employees of firms that experienced the worst stock performance over the last 10 years allocate 10.37 percent of their <jats:italic>discretionary</jats:italic> contributions to company stock, whereas employees whose firms experienced the best stock performance allocate 39.70 percent. Allocations to company stock, however, do not predict future performance.</jats:p>