How value–glamour investors use financial information: UK evidence of investors’ confirmation bias
Year: 2012
Type: article
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.
Source: European Journal of Finance
Authors: Chau Duong, Gioia Pescetto, Daniel Santamaria
Institutions: Canterbury Christ Church University, University of Portsmouth
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2011731187