How value-glamour investors use financial information: UK evidence of investor's confirmation bias

Chau Doung, Gioia Pescetto, Daniel Santamaria

Research output: Contribution to journalArticle

8 Citations (Scopus)

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.
Original languageEnglish
Pages (from-to)524-549
Number of pages25
JournalThe European Journal of Finance
Volume20
Issue number6
Early online date7 Nov 2012
DOIs
Publication statusPublished - 2014
Externally publishedYes

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Investors
Financial information
Confirmation bias
Investor behavior
Empirical evidence
Investing
News
Fundamental analysis

Cite this

How value-glamour investors use financial information: UK evidence of investor's confirmation bias. / Doung, Chau; Pescetto, Gioia; Santamaria, Daniel.

In: The European Journal of Finance, Vol. 20, No. 6, 2014, p. 524-549.

Research output: Contribution to journalArticle

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