Do culture, sentiment, and cognitive dissonance explain the ‘above suspicion’ anomalies?

Ali Altanlar, Jiaqi Guo, Phil Holmes

Research output: Contribution to journalArticle

1 Citation (Scopus)

Abstract

We investigate how cognitive dissonance arising from interactions between sentiment and culture affects momentum and post-earnings-announcement-drift (PEAD). We focus on differing views relating to change between western and East Asian cultures. Building on Hong and Stein's heterogeneous trader model and recognizing westerners’ (easterners’) belief in continuation (reversal), we propose cognitive dissonance arises in different circumstances and to differing degrees in the two cultures, resulting in it being a key driver of the anomalies. Results support our hypotheses, suggesting sentiment and culture interact to impact cognitive dissonance, explaining differences in the anomalies across countries evident in prior literature.

Original languageEnglish
Pages (from-to)1168-1195
Number of pages28
JournalEuropean Financial Management
Volume25
Issue number5
Early online date10 Oct 2018
DOIs
Publication statusPublished - Nov 2019

Fingerprint

Sentiment
Anomaly
Suspicion
Cognitive dissonance
Traders
Reversal
Post-earnings announcement drift
Interaction
Asia
Momentum

Keywords

  • cognitive dissonance
  • culture
  • investor sentiment
  • momentum
  • post-earnings-announcement-drift

ASJC Scopus subject areas

  • Accounting
  • Economics, Econometrics and Finance(all)

Cite this

Do culture, sentiment, and cognitive dissonance explain the ‘above suspicion’ anomalies? / Altanlar, Ali ; Guo, Jiaqi; Holmes, Phil.

In: European Financial Management, Vol. 25, No. 5, 11.2019, p. 1168-1195.

Research output: Contribution to journalArticle

@article{e2956013343b419b98d7e97b651c49e6,
title = "Do culture, sentiment, and cognitive dissonance explain the ‘above suspicion’ anomalies?",
abstract = "We investigate how cognitive dissonance arising from interactions between sentiment and culture affects momentum and post-earnings-announcement-drift (PEAD). We focus on differing views relating to change between western and East Asian cultures. Building on Hong and Stein's heterogeneous trader model and recognizing westerners’ (easterners’) belief in continuation (reversal), we propose cognitive dissonance arises in different circumstances and to differing degrees in the two cultures, resulting in it being a key driver of the anomalies. Results support our hypotheses, suggesting sentiment and culture interact to impact cognitive dissonance, explaining differences in the anomalies across countries evident in prior literature.",
keywords = "cognitive dissonance, culture, investor sentiment, momentum, post-earnings-announcement-drift",
author = "Ali Altanlar and Jiaqi Guo and Phil Holmes",
year = "2019",
month = "11",
doi = "10.1111/eufm.12203",
language = "English",
volume = "25",
pages = "1168--1195",
journal = "European Financial Management",
issn = "1354-7798",
publisher = "Wiley-Blackwell",
number = "5",

}

TY - JOUR

T1 - Do culture, sentiment, and cognitive dissonance explain the ‘above suspicion’ anomalies?

AU - Altanlar, Ali

AU - Guo, Jiaqi

AU - Holmes, Phil

PY - 2019/11

Y1 - 2019/11

N2 - We investigate how cognitive dissonance arising from interactions between sentiment and culture affects momentum and post-earnings-announcement-drift (PEAD). We focus on differing views relating to change between western and East Asian cultures. Building on Hong and Stein's heterogeneous trader model and recognizing westerners’ (easterners’) belief in continuation (reversal), we propose cognitive dissonance arises in different circumstances and to differing degrees in the two cultures, resulting in it being a key driver of the anomalies. Results support our hypotheses, suggesting sentiment and culture interact to impact cognitive dissonance, explaining differences in the anomalies across countries evident in prior literature.

AB - We investigate how cognitive dissonance arising from interactions between sentiment and culture affects momentum and post-earnings-announcement-drift (PEAD). We focus on differing views relating to change between western and East Asian cultures. Building on Hong and Stein's heterogeneous trader model and recognizing westerners’ (easterners’) belief in continuation (reversal), we propose cognitive dissonance arises in different circumstances and to differing degrees in the two cultures, resulting in it being a key driver of the anomalies. Results support our hypotheses, suggesting sentiment and culture interact to impact cognitive dissonance, explaining differences in the anomalies across countries evident in prior literature.

KW - cognitive dissonance

KW - culture

KW - investor sentiment

KW - momentum

KW - post-earnings-announcement-drift

UR - http://www.scopus.com/inward/record.url?scp=85058155124&partnerID=8YFLogxK

U2 - 10.1111/eufm.12203

DO - 10.1111/eufm.12203

M3 - Article

VL - 25

SP - 1168

EP - 1195

JO - European Financial Management

JF - European Financial Management

SN - 1354-7798

IS - 5

ER -