Title

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

Document Type

Article

Source of Publication

International Review of Financial Analysis

Publication Date

11-1-2017

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.

ISSN

1057-5219

Publisher

Elsevier Inc.

Volume

54

First Page

54

Last Page

62

Disciplines

Business

Keywords

Cognitive biases, Conservatism, Representativeness

Scopus ID

85029701408

Indexed in Scopus

yes

Open Access

no

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