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Mood and stock returns: evidence from Greece

Author

Listed:
  • Dimitrios Kourtidis
  • Željko Šević
  • Prodromos Chatzoglou

Abstract

Purpose - – The purpose of this paper is to examine the effect of investors’ emotional state (mood) on their trading behaviour and performance. Design/methodology/approach - – A sample from a representative survey of 328 Greek individual investors has been used to empirically test the validity of the proposed associations. An iterative data collection process was followed, where individual investors had to complete a questionnaire every time they were trading in the Athens Stock Exchange, for a period of ten months. Exploratory factor analysis was first used to analyse the data set, followed by cluster analysis (to identify investor profiles based on differences in their mood). Findings - – Two clusters have been identified. The first cluster profile includes investors with high score of positive mood (thus, high energetic arousal and hedonic tone, low tense arousal and anger frustration), while the second profile consists of investors with negative mood (low energetic arousal and hedonic tone, high tense arousal and anger frustration). The comparison between the two profiles has shown that investors with positive mood achieve higher stock returns than investors with negative mood. Originality/value - – To the best of the authors’ knowledge there is no other similar study.

Suggested Citation

  • Dimitrios Kourtidis & Željko Šević & Prodromos Chatzoglou, 2016. "Mood and stock returns: evidence from Greece," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 43(2), pages 242-258, May.
    • Handle: RePEc:eme:jespps:v:43:y:2016:i:2:p:242-258
    DOI: 10.1108/JES-09-2014-0158
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    More about this item

    Keywords

    Mood; Behavioural finance; Stock trading performance; C30; D14; G11; O16;
    All these keywords.

    JEL classification:

    • C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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