How value–glamour investors use financial information: UK evidence of investors’ confirmation bias

Duong, Chau Minh; Pescetto, Gioia; Santamaría, Daniel J.

doi:10.1080/1351847x.2012.722117

Cited by 30 publications

(25 citation statements)

References 51 publications

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“…They found that biased investors choose messages that support their beliefs, exhibiting confirmation bias, and trade more actively. This is also supported by Duong et al (2014), who found confirmation bias among UK investors. Their study concluded that pessimistic value investors tend to overreact to bad information, whereas optimistic value investors overreact to good information.…”

Section: Introductionsupporting

confidence: 65%

“…Since the past decades, a voluminous literature has been exploring the effect of psychological factors such as overconfidence bias (Gervais & Odean, 2001;Glaser & Weber, 2007;Kourtidis et al, 2017;Odean, 1998), confirmation bias (Duong et al, 2014;Park et al, 2013), self-serving bias (Chin et al, 2018;Moosa & Ramiah, 2017), and behavioural biases such as disposition effect, mental accounting, heuristics bias, herding, etc. on investors' anomaly such as excessive trading volume or trading frequency (Baker et al, 2019;Barber et al, 2009;Barberis & Huang, 2001;Chen et al, 2007;Choe & Eom, 2009).…”

Section: Introductionmentioning

confidence: 99%

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What Drives Excess Trading during the COVID-19 Pandemic?

Chin

2021

AJBA

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Manuscript type: Research paperResearch aims: This study aims to examine the underlying psychological and sociological factors that drive excess trading in the Malaysian stock market during a global health crisis such as the COVID-19 pandemic. Design/Methodology/Approach: A self-administered online questionnaire was collected from 271 individual investors to examine the association between big-five personality traits and trading frequency. Demographic information and investment behaviours of investors were also included in the study. The multinomial logit regression model was used to test the research hypotheses. Research findings: Findings show that personality traits such as openness to experience and agreeableness have a significant influence on trading frequency. Demographic factors and investment behaviours such as gender, household income level, years of investment experience and type of investor all have a significant positive relationship with trading frequency. Theoretical contribution/Originality: This study contributes to the current investor behaviour literature in Malaysia, which remains to be very limited, especially during a global health crisis. The study indicates that personality traits, demographic, socio-economic factors, and investment behaviours affect the trading frequency of Malaysian. Practitioner/Policy implication: This study offers insights for financial institutions and individual investors on the type of personality traits, demographic, socio-economic factors, and investment behaviours that drive excess trading during a global health crisis. The findings provide important contributions to avoid serious mistakes in investment analysis and trading profitable investment strategies, thus improving individual and team performance. Research limitation/Implications: Some results are not significant and may be limited due to the small sample size used in this study. Future research could recruit more retail investors to confirm the significance level of those variables. Besides, the study can be conducted after the COVID-19 pandemic to explore whether there is any significant difference in the variables during and after the global health crisis.

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Section: Introductionsupporting

confidence: 65%

Section: Introductionmentioning

confidence: 99%

What Drives Excess Trading during the COVID-19 Pandemic?

Chin

2021

AJBA

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“…Practitioner-focused strategy writing emphasizes the need for managers to consider the effects of the bias (Schoemaker & Day, 2009;Urbany, Reynolds, & Phillips, 2008). Thus it seems clear that confirmation bias represents a fundamental aspect of how individuals process information, regardless of setting or context (e.g., Duong, Pescetto, & Santamaria, 2014, Minas, Potter, Dennis, Bartelt, & Bae, 2014.…”

Section: The Implications Of Social Psychology and Social Cognition Tmentioning

confidence: 99%

Confirmation bias in individual-level perceptions of psychic distance: An experimental investigation

Baack

Dow²,

Parente

et al. 2015

J Int Bus Stud

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In this article we draw from social cognition theory to explore the influence of confirmation bias on perceptions of psychic distance. Despite the prominence of psychic distance, and other forms of distance, as potential predictor variables in international business (IB) research, very little work has been done exploring the factors and processes that shape a decision maker's perceptions of distance. We argue in this article that social cognition theory can help fill that void. Specifically, we hypothesize that confirmation bias may influence managers' processing of information concerning differences between cultures. Such a bias may cause managers to attend more to information that confirms pre-existing beliefs, and discount information that contradicts pre-existing beliefs, thus biasing their perceptions of psychic distance. Using an experimental approach, the impact of confirmation bias on perceptions of psychic distance is confirmed in a sample of 200 Australian managers. The observed changes in perceptions are also associated with changes in perceptions of risk and preferences for entry modes in a hypothetical business scenario. As a result this article demonstrates how the application of social psychology theories and methods can provide new theoretical perspectives to explain when, how, and why individual-level perceptions of psychic distance might diverge from national-level averages.

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“…People are justifying that the decline in Bitcoin prices is only temporary and will rise again. Duong, Pescetto, & Santamaria (2014) who researched stock trading listing on the UK stock exchange during 1991-2007 found evidence of confirmation bias on stock investors in responding to good and bad information. Park et al (2010) who observed the behaviour of 502 investors in South Korea proved that investors experienced confirmation bias when processing information from message boards.…”

Section: Confirmation Biasmentioning

confidence: 99%

Behavioural Biases in Bitcoin Trading

Hidajat

2019

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This paper aims to propose some behavioural biases of trading in Bitcoin. It is review literature in the areas of behavioural finance that address issues related to Bitcoin to underpin the conceptual model. A conceptual model for understanding the behavioural bias that affects investing in cryptocurrency is proposed. The biases are herding, optimism, overconfidence, confirmation bias, loss aversion, and gamblers’ fallacy. This paper ought to fill the research gap on cryptocurrency from the behavioral perspective. This paper implies that prices and Bitcoin transactions are more determined by psychological factors.

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How value–glamour investors use financial information: UK evidence of investors’ confirmation bias

Cited by 30 publications

References 51 publications

What Drives Excess Trading during the COVID-19 Pandemic?

What Drives Excess Trading during the COVID-19 Pandemic?

Confirmation bias in individual-level perceptions of psychic distance: An experimental investigation

Behavioural Biases in Bitcoin Trading

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