Commenced in January 2007
Frequency: Monthly
Edition: International
Paper Count: 4

Search results for: Disposition effect

4 Earnings-Related Information, Cognitive Bias, and the Disposition Effect

Authors: Chih-Hsiang Chang, Pei-Shan Kao

Abstract:

This paper discusses the reaction of investors in the Taiwan stock market to the most probable unknown earnings-related information and the most probable known earnings-related information. As compared with the previous literature regarding the effect of an official announcement of earnings forecast revision, this paper further analyzes investors’ cognitive bias toward the unknown and known earnings-related information, and the role of media during the investors' reactions to the foresaid information shocks. The empirical results show that both the unknown and known earnings-related information provides useful information content for a stock market. In addition, cognitive bias and disposition effect are the behavioral pitfalls that commonly occur in the process of the investors' reactions to the earnings-related information. Finally, media coverage has a remarkable influence upon the investors' trading decisions.

Keywords: Cognitive Bias, role of media, disposition effect, earnings-related information, behavioral pitfall

Procedia APA BibTeX Chicago EndNote Harvard JSON MLA RIS XML ISO 690 PDF Downloads 433
3 The Study on the Relationship between Momentum Profits and Psychological Factors: Evidence from Taiwan

Authors: Chih-Hsiang Chang

Abstract:

This study provides insight into the effects of investor sentiment, excess optimism, overconfidence, the disposition effect, and herding formation on momentum profits. This study contributes to the field by providing a further examination of the relationship between psychological factors and momentum profits. The empirical results show that there is no evidence of significant momentum profits in Taiwan’s stock market. Additionally, investor sentiment in Taiwan’s stock market significantly influences its momentum profits.

Keywords: Psychological Factors, momentum profits, herding formation, investor sentiment

Procedia APA BibTeX Chicago EndNote Harvard JSON MLA RIS XML ISO 690 PDF Downloads 774
2 The Relationship between the Disposition Effect and Herding Behavior: Evidence from Taiwan’s Information Technology Stocks

Authors: Chih-Hsiang Chang

Abstract:

This study aims to explore the relationship between the disposition effect and herding behavior of investors trading Taiwanese information technology stocks. This study differs from previous literature in two aspects. First, in contrast with the earlier studies that focused on investigating investors’ herding behavior, this study explores the possibility that the disposition effect drives investors’ herding behavior. Additionally, it takes an in-depth look at the interdependence between the disposition effect and herding behavior of investors, including lead-lag relationship and volatility transmission effect. Empirical results show that investors trading Taiwan’s information technology stocks exhibit pronounced herding behavior and that the disposition effect has a great impact on their herding behavior.

Keywords: disposition effect, Herding behavior, Behavioral finance

Procedia APA BibTeX Chicago EndNote Harvard JSON MLA RIS XML ISO 690 PDF Downloads 2212
1 Elucidating the Influence of Demographics and Psychological Traits on Investment Biases

Authors: Huei-Wen Lin

Abstract:

This study explored the relationship between psychological traits, demographics and financial behavioral biases for individual investors in Taiwan stock market. By using questionnaire survey method conducted in 2010, there are 554 valid convenient samples collected to examine the determinants of three types of behavioral biases. Based on literature review, two hypothesized models are constructed and further used to evaluate the effects of big five personality traits and demographic variables on investment biases through Structural Equation Model (SEM) analysis. The results showed that investment biases of individual investors are significantly related to four personality traits as well as some demographics.

Keywords: Behavioral finance, Personality Traits, overconfidence, Big Five, disposition effect, herding

Procedia APA BibTeX Chicago EndNote Harvard JSON MLA RIS XML ISO 690 PDF Downloads 2773