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The Psychology of Investing: Stock Market Recommendations and Their Impact on Investors’ Decisions (The Example of the Polish Stock Market)

Author

Listed:
  • Jakub Keller

    (Department of Corporate Finance, University of Lodz, Poland)

  • Radoslaw Pastusiak

    (Department of Corporate Finance, University of Lodz, Poland)

Abstract

This study seeks to show the impact of stock recommendation reports on the efficiency of investments in the Polish stock market. The study is carried out in two stages: the first takes place at the micro-level and is based on a behavioural experiment, while the second focuses on the verification of our results obtained on a real market. The main assertion is that stock recommendations create heuristic effects among investors near the publication date of the recommendation. The ambiguity of the recommendations hinders investors’ reliable and unequivocal evaluation in investment decisions. There are studies in this field for different stock markets and periods of time, but our research added significant new knowledge about the functioning of the Polish stock exchange. Our study fits into the mainstream analysis of outlining the behaviour of investors in the capital market. The research findings underpin our pessimism about the impact of stock recommendations on investors’ behaviour.

Suggested Citation

  • Jakub Keller & Radoslaw Pastusiak, 2016. "The Psychology of Investing: Stock Market Recommendations and Their Impact on Investors’ Decisions (The Example of the Polish Stock Market)," Acta Oeconomica, Akadémiai Kiadó, Hungary, vol. 66(3), pages 419-437, September.
    • Handle: RePEc:aka:aoecon:v:66:y:2016:i:3:p:419-437
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    File URL: http://www.akademiai.com/doi/pdf/10.1556/032.2016.66.3.3
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    Citations

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    Cited by:

    1. Györfy Lehel & Madaras Szilárd, 2020. "Influencing Factors of the Informal Investment in Central Europe," Economics and Business, Sciendo, vol. 34(1), pages 78-91, February.

    More about this item

    Keywords

    capital market; behavioural fi nance; behavioural biases; heuristics; trading; investments; Warsaw Stock Exchange;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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