Title

Cognitive biases in investors’ behaviour under stress: Evidence from the London Stock Exchange

Source of Publication

International Review of Financial Analysis

Abstract

© 2017 Elsevier Inc. The paper examines the implications arising from the effect of two cognitive biases, representativeness and conservatism, for securities price behaviour on the London Stock Exchange. In a single- and multi-factor framework of abnormal returns, the aspects of trend and consistency in the performance ratios of UK companies are examined on the base of behavioural finance theories with respect to cognitive biases. The findings obtained by the multi-factor model confirm the existence of two cognitive biases and trends that investors observe in financial performance over the long-term horizon, which is not the case for the single-factor model.

Document Type

Article

First Page

54

Last Page

62

Publication Date

11-1-2017

DOI

10.1016/j.irfa.2017.09.003

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