Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/70122
Authors: 
Kempf, Alexander
Merkle, Christoph
Niessen-Ruenzi, Alexandra
Year of Publication: 
2012
Series/Report no.: 
CFR Working Paper 09-10 [rev.]
Abstract: 
This experimental study investigates the impact of affective attitudes on risk and return estimates of stocks. Participants rate well-known blue-chip firms on an affective scale and forecast risk and return of the firms' stock. We find that positive affective attitudes lead to a prediction of high return and low risk, while negative attitudes lead to a prediction of low return and high risk. This bias increases with participants' confidence in their ratings and decreases with financial literacy. Firm characteristics such as a firm's marketing expenditures and the strength of its brand have a positive impact on its affective rating.
Subjects: 
affective attitudes
risk and return expectations
behavioral finance
affect heuristic
JEL: 
D80
G02
G11
Document Type: 
Working Paper

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