A Bibliometric Analysis of Behavioral Finance and Behavioral Accounting

This paper presents a bibliometric analysis of relevant publications in the field of behavioral finance and behavioral accounting. The analysis shows that the emerging themes of research in recent years in behavioral finance is on investors’ sentiment, social media, investors’ attention, and financial literacy. In the field of behavioral accounting, biases such as overconfidence, framing effects or cognitive constraints on information processing, have been explored in greater detail. Other than cognitive biases, this field includes studies such as behavioral tax, organizational ecology, and performance evaluative style of organization, among others. Interestingly, our analysis suggests that research in behavioral accounting is comparatively underdeveloped than research in behavioral finance. This bibliometric analysis has been extended by network analysis using, “Visualization of similarities, (VOS) viewer” software. Using the themes generated here the direction for future scope of research work has been discussed

Investor relations: A bibliometric study in behavioral finance, behavioral economics and behavioral accounting

This study aims to verify the main characteristics of the scientific production on behavioral finance applied to the area of investor relations. Through a bibliometric research carried out in the Scopus database, 121 publications were found, which were analyzed by statistical and graphic techniques. The results indicate a numerically reduced and volatile production of articles on the subject, without robust growth so far. Few documents were found by author, institution, and journal, as well as a small number of connections, concerning citations, among them. This research area is thus largely unexplored within behavioral finance, although academic production in behavioral economics on the use of prospects for selling complex products is proportionally very broad. Bibliographic coupling indicated four main themes, the most relevant being the influence of the different disclosure means of financial information on investor behavior. These results suggest that the subject has not aroused the interest of researchers and that, although relevant, it is still little explored. On the other hand, the results indicate a broad field for further studies. These findings are relevant, since they allow a clear and comprehensive view on a relevant and still little explored theme

Investor sentiment in the theoretical field of behavioural finance

Investor sentiment is a research area in the theoretical field of behavioural finance that analyses the sentiment of investors and the way it influences stock market activity. Recently, there has been an increase in the number of publications in this area, which indicates its incremental relevance. To date, there is no consensus on the theoretical structure of behavioural finance nor on the investor sentiment research area. We have used co-citation, bibliographic coupling and co-occurrence analysis to provide an overview of the structure of investor sentiment. Therefore, this study contributes to defining the theoretical structure of investor sentiment by identifying the foundations of the research area and main journals, references, authors, or keywords, which represent the core of knowledge of this research area. The results obtained suggest that investor sentiment is related to efficient market theory and behavioural finance theories. Furthermore, investor sentiment is a relevant research field, especially since 2014. Advances in computer science or theories based on physics or mathematics can help to better define the influence of investor sentiment on stock markets. This study advances research on investor sentiment within the field of behavioural finance, thus showing its relevance

Analysing the Factors Affecting the Long-term Investment Intention of Investors

The intention of investors to invest over a long term is generally aimed toward stable returns and low liquidity. The framework of this article looks at the theoretical concepts, investor characteristics and investor bias in a risk profile that could influence investors' intent to invest over the long term. Based on traditional investment theory, investment companies acknowledge the impact of risk tolerance on the desired investment horizon of investors. However, traditional risk assessments are limited since they omit variables like personality measures and behavioural finance biases which could affect an investor’s long-term investment intentions. The unfavourable results might be less accurate investor profiles and an investment portfolio not meeting the required return objective. This study included a sample size of 593 private investors. The results indicated that personality traits (extraversion, openness to experience), risk tolerance, and behavioural biases (overconfidence bias) significantly influence long-term investment intentions. By incorporating the above-mentioned factors, financial planners and institutions can more accurately profile their clients and offer financial products that are more suitable for the investor's needs

Effect of behavioural biases on investment decision for structured products by retail investors at Nairobi Securities Exchange

A Thesis submitted in partial fulfillment of the requirements for the award of the Degree of Masters of Business Administration at Strathmore University Business SchoolThe introduction of structured products to the Nairobi Securities Exchange, whose access previously was only limited to corporate investors, has been followed by mixed uptake of the investment option by retail investors in the local market. While the Fahari i-REIT Initial Public Offering at the Nairobi Securities Exchange wasn’t as successfully subscripted and only managed to raise one-third of the targeted KES 12.5 Billion subscription, the issuance of KES 4.2bn 5-year Equity Linked Notes by Centum Investment Company was on the other hand successful. The novelty of the investment option in Kenya and focus by the Capital Markets Authority to spur uptake of corporate bonds among investors therefore merits attention of analysis of effects of behavioural biases influence on investment decision by investors. The study investigated the effects of behavioural biases on investment decision for structured products by retail investors at Nairobi Securities Exchange. The specific objectives for the study were to determine the effect of herding bias, overconfidence bias, anchoring bias and representativeness bias on investment decision for structured products by retail investors at Nairobi Securities Exchange. The researcher used a structured questionnaire and collected primary data from 109 individual investors currently or previously investing in structured products. The research design that was adopted was descriptive cross sectional design as it aimed to investigate the relationship between the independent variable, behavioural biases, and the dependent variable, investment decisions. The two inferential analysis tools that were used included spearman’s correlation and linear regression. From this study, the findings indicated that anchoring bias presented a significant relationship with investment decision, while herding, overconfidence and representativeness variables presented insignificant correlation coefficient. There was a marginal effect of behavioural biases on investment decision making for structured products by retail investors at the NSE and therefore, the study recommends a review of the effects of the behavioural biases on each of the investment decision constructs to contribute to the current theoretical knowledge on the effects of behavioural biases on investment decisions. To policy makers, this study provides clarity on the need to educate potential investors on structured products and also on policy requirements for structured products to mitigate against the effects of behavioural biases by retail investors and encouragement investment in the sector. For practitioners in financial markets, the study provided clarity on how they can approach potential investors with the aim of convincing them to invest

Do Retail Investors Fall for Bad Boys? An empirical study of whether narcissistic CEOs manipulate retail investors into financial peril

The purpose of this thesis is to investigate whether retail investment decisions are influenced by CEO personalities, and whether it has adverse financial implications. Specifically, we are interested in the notion that narcissistic CEOs exploit retail investors to finance their personal agendas, at the cost of shareholder returns. Our research question is motivated by the current media narrative, portraying CEOs, such as Elon Musk, as narcissists manipulating vulnerable retail investors. In order to provide empirical evidence, we leverage a custom narcissism index and Robinhood trading data to study a sample of CEOs from the Technology and TMT sector in the S&P 500 index. Applying a panel data regression, we find that CEO narcissism does in fact influence retail investor holdings through the moderation of media coverage, either deliberately and/or inadvertently. Contrary to the media narrative, however, we find the effect to be predominantly negative and find no evidence of adverse financial outcomes.nhhma

The Black-Litterman model in continuous time: analysis of the effect of biased expert forecasts on asset allocations

The objective of this thesis is to compare portfolios optimized using the Black-Litterman model in continuous time, with a focus on analyzing the impact of biased expert opinions on asset allocations. Behavioral biases play a crucial role in finance professionals' perception, information processing, and forecast formation. The thesis is structured as follows. The first chapter provides an introduction to the Black-Litterman model and its applications in continuous time, as well as an overview of the main behavioral biases and methods for reducing their influence. The second chapter focuses on presenting the mathematics behind the Black-Litterman model in continuous time. The third chapter presents the practical implementation of the model and compares the results obtained to assess the impact of biased expert forecasts on portfolio construction.The objective of this thesis is to compare portfolios optimized using the Black-Litterman model in continuous time, with a focus on analyzing the impact of biased expert opinions on asset allocations. Behavioral biases play a crucial role in finance professionals' perception, information processing, and forecast formation. The thesis is structured as follows. The first chapter provides an introduction to the Black-Litterman model and its applications in continuous time, as well as an overview of the main behavioral biases and methods for reducing their influence. The second chapter focuses on presenting the mathematics behind the Black-Litterman model in continuous time. The third chapter presents the practical implementation of the model and compares the results obtained to assess the impact of biased expert forecasts on portfolio construction

Judgmental forecasting: Factors affecting lay people's expectations of inflation

In this thesis, laypeople’s judgmental forecasting about inflation is reviewed and experimentally explored in six chapters. Inflation is defined as the Consumer Price Index (CPI) across the whole thesis. In Chapter 1, I review work on the formation of inflation expectations, drawing mainly from the economic literature. In Chapter 2, I review research on judgmental forecasting, drawing mainly from the literature in cognitive psychology and management science. In Chapter 3, three experiments are presented that were designed to determine how and when people employ internal information of experienced price changes to form inflation expectations. In Chapter 4, three experiments are used to investigate the effects of providing within-series and across-series historical information (inflation rates, interest rates and unemployment rates) on inflation expectations. In Chapter 5, two experiments are reported that examine how training using simple outcome feedback increases the accuracy of inflation judgments and improves the calibration of confidence in those judgments. Chapter 6 reports experiments designed to examine the effects of using different elicitation methods (point forecasts, interval forecasts and density forecasts) on the accuracy of inflation judgments. Chapter 7 is a concluding chapter that summarises findings from these experiments and suggests avenues for future work

Bibliometric analysis on investor protection

Este artículo analiza la evolución y el estado de la investigación sobre la protección del inversor a través de un análisis bibliométrico y una revisión sistemática de la literatura. La metodología se basa en los artículos incluidos en la base de datos de Web of Science, utilizando el software bibliométrico SciMAT. Dentro de las principales conclusiones, este estudio revela la creciente importancia de la investigación sobre la protección del inversor en los últimos años, centrándose en los accionistas como figura principal, sin considerar otros tipos de inversores o incluso consumidores financieros, en general. La investigación sobre la protección del inversor ha evolucionado desde aspectos legales y corporativos a otros factores que se configuran como nuevas referencias para los inversores. Hasta el momento, los studios se centran principalmente en temas de gobierno corporativo, sin abordar otros factores ambientales y sociales vinculados a la agenda 2030 para el desarrollo sostenible. Los resultados de este estudio muestran la necesidad de investigar sobre la protección del consumidor financiero en general, incluyendo además del gobierno corporativo, los factores medioambientales y sociales. Con respecto a las implicaciones prácticas, este trabajo podría servir para mostrar nuevas líneas de investigación futuras con el fin de evaluar la situación del consumidor financiero en un sentido amplio y mejorar las regulaciones para preservarlo.This paper maps the evolution and current state of research on Investor Protection through a bibliometric analysis and systematic literature review. The methodology is based on the articles included in the Web of Science database, using SciMAT bibliometric software. Within the main findings, this study reveals the greater importance of Investor Protection research in the past. Investor Protection has been focused on shareholders as the main type of investor, not considering other types of investors or even financial consumers more generally. Investor Protection research has evolved from legal and corporate aspects to include other factors that are configured as new references for the investors. Until now, there is only mention of      corporate governance, lacking academic research about environmental and social factors linking to the 2030 agenda for sustainable development. The results of this study show the need for research about financial consumer protection, including not only corporate governance, but also environmental and social factors. The practical implications of this paper might serve to show new future research lines in order to evaluate the situation of the financial consumer in a broad sense and to improve regulations in order to preserve it

Animal Spirits and Extreme Confidence: No Guts, No Glory?

This study investigates to what extent extreme confidence of either management or security analysts may impact financial or operating performance. We construct a multidimensional degree of company confidence measure from a wide range of corporate decisions. We empirically test this measure for large US companies from 1980 -2008 and find significantly different company and performance characteristics between confidence extremes. Diffident firms tend to be smaller, more distressed, less conservatively financed and, except for the new millennium, yield a lower return on invested capital with higher variability. When adjusting stock returns for risk, the performance differences prior to moving to extreme confidence become even more pronounced. Extreme confidence could also distort earnings forecasts as analyst may overly rely on an anchor or make insufficient adjustments. Innate bias, anchoring to prior year earnings, risk attitude and responses to recent news are conditional on the level of analysis. Innate optimism prevails on the industry and analyst level. We find no support for anchoring by analysts with a long track record or across industries, which suggests a bottom-up approach. Long-term risk is considered as upside and short-term risk as downside potential. There is also a tendency to underreact to news, the extent of which seems conditional on the direction