How value-glamour investors use financial information: UK evidence of investor's confirmation bias

Journal article


Doung, C., Pescetto, G. and Santamaria, D. 2014. How value-glamour investors use financial information: UK evidence of investor's confirmation bias. The European Journal of Finance. 20 (6), pp. 524-549. https://doi.org/10.1080/1351847X.2012.722117
AuthorsDoung, C., Pescetto, G. and Santamaria, D.
Abstract

The paper investigates investor’s behaviour in the context of value–glamour investing and fundamental analysis, and provides a direct test of the confirmation bias by bringing together the evidence from several strands of literature into a well-defined framework of investor behaviour. The empirical evidence presented is in line with a model of
investor’s asymmetric reaction to good and bad news due to confirmation bias. Pessimistic value investors typically under-react to good financial information, but they process bad information rationally or over-confidently. On the contrary, glamour investors are often too optimistic to timely update prices following bad financial information, but they are likely to fairly price or even over-react when receiving good information.

KeywordsValue–glamour investing; financial statement analysis; contextual fundamental analysis; market efficiency; behavioural finance; confirmation bias
Year2014
JournalThe European Journal of Finance
Journal citation20 (6), pp. 524-549
PublisherTaylor & Francis
ISSN1351-847X
Digital Object Identifier (DOI)https://doi.org/10.1080/1351847X.2012.722117
Publication dates
Print2014
Publication process dates
Deposited11 Dec 2014
Accepted01 Apr 2014
Output statusPublished
File
Permalink -

https://repository.canterbury.ac.uk/item/87306/how-value-glamour-investors-use-financial-information-uk-evidence-of-investor-s-confirmation-bias

  • 35
    total views
  • 410
    total downloads
  • 0
    views this month
  • 0
    downloads this month

Export as