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http://hdl.handle.net/10419/41360
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| Title: | | Low risk and high return - how emotions shape expectations on the stock market |
| Authors: | | Kempf, Alexander Niessen-Ruenzi, Alexandra Merkle, Christoph |
| Issue Date: | | 2009 |
| Series/Report no.: | | CFR working paper 09-10 |
| Abstract: | | This experimental paper investigates the impact of emotions on risk and return estimates of stocks. Participants rate well-known blue-chip firms on an emotional scale and forecast risk and return of the firms' stock. We find that positive emotions lead to a prediction of high return and low risk, while negative emotions lead to a prediction of low return and high risk. This bias increases with participants' confidence in their ratings and decreases with financial literacy. We conclude that firms with a positive emotional appeal attract less financially literate and more emotional investors. In line with this conjecture, we find that firms that are rated very positively are held by a larger fraction of retail investors. |
| Subjects: | | Emotions Risk and Return Estimation Behavioral Finance Affect Heuristic |
| JEL: | | D80 D81 G10 |
| Is replaced by the following version: | | http://hdl.handle.net/10419/70122 |
| Document Type: | | Working Paper |
| Appears in Collections: | | CFR Working Papers, Centre for Financial Research (CFR), Universität Köln
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| The document was removed on behalf of the author(s)/ the editor(s) on: February 13, 2013 |
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